I'm so glad I didn't take Vonage's invitation to partcipate in its IPO. Less than one year after, the VOIP company is seriously looking at bankruptcy as an option.

Vonage Holdings Corp. says bankruptcy is among the potential risks from its continuing patent litigation with phone giant Verizon Communications Inc., as the Internet calling start-up's problems deepen.

Vonage made the statement in its annual report to the Securities and Exchange Commission yesterday.

The case pits the second-largest U.S. telecommunications company, Verizon, against a start-up that once promised to revolutionize the phone world by offering discounted Web-based calls. Instead, Vonage's existence is now in question as competition from cable and phone companies mounts and its legal woes have worsened.

A federal jury in Virginia ruled last month the company had infringed on Verizon's patents, and a judge ordered an injunction on its service. Vonage is contesting the decision; its service has been unaffected so far. The Federal Circuit Court of Appeals will hear arguments next week on whether Vonage can sign up new customers during the appeals process.

In the filing, Vonage listed problems it could face because of the Verizon litigation and other patent lawsuits, including loss of customers and distribution channels, substantial employee layoffs, a continued decline in its share price and the inability to meet its debt obligations, which could lead to a bankruptcy filing.