The Cheese Dreams direct sequel is a cancelled direct sequel to Cheese Dreams. This game would have taken place directly after the events of Cheese Dreams. Although development was started on the sequel at an unknown point in time, the only work done on the game was some artwork which were early designs of what the game would look like.
No coding, or any actual playable demo of the game was ever made. The game was soon cancelled after going into development, the reason for its cancellation being unknown.
Nitrome is currently not working on the game, and even if they did return to it, it would completely begin anew (from scratch) and not start off from where they left off with the cancelled Cheese Dreams direct sequel.
↑ 2.02.12.22.32.4Nitrome blog: - Test Subject Arena 2 Progress → Comment by Nitrome: It never progressed past some artwork which was more or less a mock up of what it would look like. There was never any code done for the project. We are not working on it and if we ever did decide to make a direct sequel we would start again so were not ruling it out but do not want to fan the flames of speculation and start everyone asking to release what we had or start asking when its coming because there was nothing playable and we are not working on it.
Nitrome:The plan of it being a remake was the same when we released the demo...it was always supposed to be a remake even then. We did a few years back toy with making a direct sequel but it never really got off the ground at that point. Fast forward many more years and we felt it was better to go back to the beginning. It possibly is the only remake we would do in flash but Icebreaker: A Viking Voyage is I suppose a remake of the original icebreaker flash games.