Southland Communications Reports Hard Times : Cash shortage: The paging equipment firm told the SEC that it has been unable to pay some of its liabilities and staff has been laid off. It is also being sued and investigated by the government.

In a recent filing with the Securities and Exchange Commission, Southland Communications Inc. said its cash flow is in “extremely critical condition” and it has laid off a quarter of its staff.

The filing made June 14 paints a bleak financial picture of the paging-services firm, which is at the center of an SEC civil suit alleging stock manipulation and an FBI criminal investigation.

The company, which also reported a loss for the second quarter ended April 30, said that as a result of a cash shortage it has been unable to meet some of its short-term liabilities, including payments to its major creditor, Motorola Corp.

Motorola sued Southland, which does business as National Paging, on May 15 to recover $5.6 million owed to it for lending Southland its paging equipment. The company also sued Ahmad N. Bayaa, the president of Southland, and his brother Ziad N. Bayaa, chief financial officer.

“If the company and Motorola are unable to resolve the Motorola action . . . there is no assurance that the company will be able to continue as a going concern,” the company said in the filing.

Southland said in the SEC filing that the amount it owes Motorola is significantly less than the amount claimed by Motorola. However, it acknowledged it has been in default on payments to Motorola since January.

Since September, the company said it has been unable to obtain financing for the purchase or lease of pagers and related equipment, and it has no unused bank credit available to it, the company said.

Southland also said it laid off 18 of its 70 employees.

For the quarter ended April 30, the company reported a loss of $392,141 on revenue of $1.6 million, compared to a loss of $239,400 on revenue of $1.5 million a year earlier. As of April 30, the company said it was in arrears in the payment of dividends on its convertible preferred stock by $358,000.

The company filed the report with the SEC a day before FBI agents searched company headquarters as part of a criminal wire-fraud investigation related to the alleged stock price manipulation.

The search, the first indication that federal authorities had broadened their investigation of Southland into possible criminal violations of securities law, came a month after the SEC sued Ahmad Bayaa, Atlanta broker-dealer Shaw Tehrani and four others for allegedly manipulating the firm’s stock.

The SEC alleges that Bayaa, Tehrani and their friends eventually cornered nearly 83% of the company’s stock in an attempt to prop up the stock price in order to complete a private placement of stock that would have provided capital for the acquisition of another paging company.

Bayaa and his attorney did not return calls for comment.