A Leesburg company that ran into financial problems before it was ready to sell a cellular telephone system it developed for smaller markets has filed for Chapter 11 reorganization with the U.S. Bankruptcy Court.

Cellular Radio Corp. of 602 S. King St., a technology research and development firm, listed liabilities of $5,626,317 and assets of $402,859. The company listed its largest liability as a $1,075,000 note held by Westinghouse Electric Corp.

Cellular Radio also owes $411,000 on a note issued by the secretary of the corporation, Robert H. Marick. Its other large claims were held by out-of-town businesses.

The company, founded in 1984, almost had reached a point where it could begin marketing its product but ran short of cash, said Richard Hall, the attorney overseeing the firm's bankruptcy filing.

"It filed to protect itself from some of its creditors and to give it a chance to reorganize and recapitalize and attract new investors," Hall said.

He said the creditors pressing for payment, such as the company's landlord, hold some of the smaller claims.

Cellular Radio developed four-channel and eight-channel cellular telephone systems -- portable radio systems connected with a telephone network.

The systems work on the same principle as cellular systems that have more than 100 channels and that serve metropolitan markets.

Cellular Radio, however, targeted smaller markets, particularly thinly populated areas such as western Canada or the Southwest United States, that would need only a few channels.

The systems have relatively low price tags -- $150,000 for the four-channel and $300,000 for the eight-channel system.

Cellular's investment to date has been in developing software and designing a product, Hall said. With little inventory on hand, there is a large gap between what the firm owns ($402,859) and what it owes ($1.7 million), Hall said.