My understanding was that Troika still has people working in their offices, although at last count, I had heard it was the three founders and a senior programmer. I do know that there have been a number of resumes from Troika employees being sent out, and I know some of the more prominent members have already taken jobs elsewhere.

Based on the screenshots of their demo alone, however, I wouldn't count them out of the running. I will say that it is extremely difficult for a small developer to land a new project, and it's a process that can usually take several months (and it can always fall apart in the 11th Hour), so it may be that Troika is simply on a hiatus period until signing a new contract, at which point they can staff up again. I think that Bloodlines, despite criticisms here and elsewhere, is a strong RPG and probably one of the best Troika has ever done (and Tim has said as much), so that alone may help them gain a new contract.

IMO, I doubt that Activision pulled funding - most developer contracts involve royalties, so if Bloodlines does well, it may result in an influx of cash for Troika. However, it usually takes a few months before the royalties to actually begin to show from sales, so that's an obstacle. I will say that Activision and Troika were most likely in a difficult position in waiting for the HL2 engine to be done, so Bloodlines may have been kept putting pushed back and back and causing problems for both Troika and Activision - Valve could afford to take their time, but I doubt the other two companies had that luxury. I wouldn't be surprised if Activision would not want to be in that position again.

Regardless, I wouldn't count Troika out yet. It can just be difficult for a company to get a contract, and it's a long, involved process. If they don't get a contract, I'll be disappointed because that means that'll be less RPGs for me to play, and it was always my feeling that Troika always made an effort to try to push the envelope on their RPGs, which I think was important for the genre.