Hi Dianna
Yep Larian is working on Divinity 2 and another secret project.
Nothing has been cancelled.
But i guess they are working hard on these two projects and they have not a lot of time to comment about them.
Have a look at the announcement section.
There are very few info about the games for instance the new engine for Divinity 2.
Larian has also updated his homepage for his upcoming great announcements.
Barta