This may come as bad news to the 4 of you left out there that still rent videos at Blockbuster. The once-great chain of video stores is once again teetering on the edge of filing for bankruptcy.

Blockbuster filed its annual report yesterday and, well… things are not looking up. Sinking sales and increasing competition from services like Netflix and on-demand video “raise substantial doubt about our ability to continue as a going concern.”

At the end of 2009, Blockbuster says that the company’s liabilities were $314.3 million greater than their total assets.

In an attempt to compete with Redbox DVD kiosks, Blockbuster had hoped to unleash 10,000 of their Blockbuster Express-branded units last year. But, according to the report, less than 4,000 of them are out there. They say they still intend on rolling out more kiosks in 2010.

The company says they’re planning to shutter between 500 and 545 underperforming retail stores in 2010. They also will be cutting $200 million in staffing and advertising.

Is Blockbuster just postponing the inevitable, or do you think they’ll eventually be able to enjoy success in the new home video marketplace?

UPDATE: Blockbuster Again Warns Of Possible Bankruptcy Filing [WSJ]

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