UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 FORM
10-QSB
 (Mark
One)
 
 x
    QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d)OF
      THE SECURITIES EXCHANGE ACT OF 1934
 
 For the
quarterly period ended March 31, 2005
 
 o
    TRANSITION
      REPORT PURSUANT TO SECTION 13 OR15(d)
      OF THE SECURITIES EXCHANGE ACT OF 1934
 
 For the
transition period from ___________ to
_____________
 
 Commission
file number 000-29905
 
 RAYBOR
MANAGEMENT INC.
 (Exact
name of small business as specified in its charter)
  Delaware
    98-0220848(State
      or other jurisdiction of
    (I.R.S.
      Employerincorporation
      or organization)
    Identification
      No.)
 221 West
10 th Street,
Medford, Oregon 97501
 (Address
of principal executive offices (zip code))
 
 541-494-4001
 (Registrant’s
telephone number, including area code)
 
 Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90
days.    Yes x No  ̈
 
 Indicate
the number of shares outstanding of each of the issuer’s classes of common
equity, as of the latest practicable date:
 
 58,424,276
shares of Common Stock, par value $0.0001 outstanding at March 31,
2005.
 
 Transitional
Small Business Disclosure Format (Check
one):    Yes  ̈ No x
 
 1
 ****
 **PART
I - FINANCIAL INFORMATION**
 
 **Item
1.**  **Financial
Statements.**
  RAYBOR
MANAGEMENT INC.
 Consolidated
Balance Sheets
 
 March 31,
2005
 
 (000’s
omitted)
  **ASSETS**
    
    Mar.
      31, 2005
    
    Dec.
      31 2004(unaudited)
    
    (audited)**Current
      assets**Cash
      and cash equivalents
    
    $
    1,142
    
    $
    220Accounts
      receivable, gross
    
    
    2,897
    
    
    2,024Allowance
      for doubtful accounts
    
    
    (739
    )
    
    (785
    )Accrued
      interest receivable
    
    
    8
    
    
    5Notes
      receivable, net
    
    
    310
    
    
    332Prepaid
      mail costs, net of amortization
    
    
    1,882
    
    
    1,355Deferred
      tax asset
    
    
    277
    
    
    320Other
      current assets
    
    
    287
    
    
    308Prepaid
      income taxes
    
    
    785
    
    
    785Total
      current assets
    
    
    6,849
    
    
    4,564**Property
      and equipment, net**
    
    
    4,129
    
    
    4,122**Other
      Assets**Notes
      receivable - long term
    
    
    4
    
    
    4Other
    
    
    6
    
    
    14Total
      other assets
    
    
    10
    
    
    18**Total
      assets**
    
    $
    10,988
    
    $
    8,704
 
 
 (continued)
 
 2
  RAYBOR
MANAGEMENT INC.
 Consolidated
Balance Sheets
 
 March 31,
2005
 
 (000’s
omitted)
  **LIABILITIES
      AND STOCKHOLDERS' EQUITY**
    
    Mar.
      31, 2005
    
    Dec.
      31, 2004(unaudited)
    
    (audited)**Current
      Liabilities**Accounts
      payable
    
    $
    1,125
    
    $
    963Bank
      Overdraft
    
    
    146
    
    
    -Accrued
      liabilities
    
    
    540
    
    
    483Commissions
      payable
    
    
    214
    
    
    132Income
      taxes payable
    
    
    -
    
    
    -Current
      portion of long-term debt
    
    
    33
    
    
    34Current
      portion of capital leases
    
    
    172
    
    
    167Line
      of credit
    
    
    398
    
    
    398Deferred
      loan proceeds
    
    
    7
    
    
    7Notes
      payable
    
    
    42
    
    
    -Other
      current liabilities
    
    
    (6
    )
    
    -Deferred
      revenue
    
    
    1,985
    
    
    1,633Total
      current liabilities
    
    
    4,656
    
    
    3,817**Long
      term liabilities**Capital
      lease obligations
    
    
    293
    
    
    337Long-term
      debt, net of current maturities
    
    
    2,395
    
    
    1,323Other
      accrued liabilities
    
    
    308
    
    
    308Total
      long term liabilities
    
    
    2,996
    
    
    1,968Total
      liabilities
    
    $
    7,652
    
    $
    5,785**Minority
      interest**Minority
      interest
    
    
    30
    
    
    20**Stockholders'
      equity**Common
      stock - $.0001 par value, 100,000,000 sharesauthorized;
      58,424,276 and 58,419,276 shares issued and outstanding as of 3-31-05 and
      12-31-04, respectively.
    
    
    6
    
    
    6Additional
      paid in capital
    
    
    1,724
    
    
    1,274Retained
      earnings
    
    
    1,576
    
    
    1,619Total
      stockholders' equity
    
    
    3,306
    
    
    2,899**Total
      liabilities and stockholders' equity**
    
    $
    10,988
    
    $
    8,704
 
 See
accompanying notes to financial statements.
 
 3
  RAYBOR
MANAGEMENT INC.
 STATEMENTS
OF OPERATIONS
 For the
Three Months Ended March 31, 2005 and 2004
 
 (000’s
omitted, except per share amounts)
 
 (unaudited)
 Three
      months endedMar.
      31, 2005
    
    Mar.
      31,2004Total
      revenues
    
    $
    5,724
    
    $
    4,116Cost
      of sales:Direct
      mail costs
    
    
    1,682
    
    
    1,287Patient
      services
    
    
    840
    
    
    342Other
    
    
    5
    
    
    24Total
      cost of sales
    
    
    2,527
    
    
    1,653Gross
      profit
    
    
    3,197
    
    
    2,463Operating
      expenses:General
      and administrative
    
    
    -
    
    
    -General
      and administrative
    
    
    -
    
    
    -Selling,
      general & administrative expenses
    
    
    3,070
    
    
    1,533Total
      operating expenses
    
    
    3,070
    
    
    1,533Income
      from operations
    
    
    127
    
    
    930Interest
      income/(expense)
    
    
    (118
    )
    
    (57
    )Income
      before minority interest & income taxes
    
    
    9
    
    
    873Provision
      for income tax
    
    
    (43
    )
    
    (435
    )Minority
      interest
    
    
    (10
    )
    
    -Net
      income
    
    $
    (44
    )
    $
    438Earnings
      (loss) per shareBasic
      - continuing operations
    
    $
    0.00
    
    $
    0.01Diluted
      - continuing operations
    
    $
    0.00
    
    $
    0.01Weighted
      average number of sharesBasic
    
    
    58,419
    
    
    34,608Diluted
    
    
    59,708
    
    
    34,608
 
 See
accompanying notes to financial statements
 4
 
 RAYBOR
MANAGEMENT INC.
 STATEMENTS
OF CASH FLOWS
 For the
three months ended March 31, 2005 and 2004
 
 (unaudited)
 
 (000’s
omitted)
  Three
      months endedMarch
      31, 2005
    
    March
      31, 2004Net
      Cash Provided By (used for) Operating Activities
    
    $
    (389
    )
    $
    115Cash
      Flows From Investing Activities:(154
    )
    
    (182
    )Payments/(advances)
      on notes receivable
    
    
    18
    
    
    489Investment
      in joint venture
    
    
    -
    
    
    (100
    )Net
      cash provided by (used in) investing activities
    
    
    (136
    )
    
    207Cash
      Flows From Financing Activities:Repayment
      of borrowings
    
    
    (9
    )
    
    (948
    )Proceeds
      from borrowings
    
    
    1,500
    
    
    -Repayment
      of capital lease obligations
    
    
    (44
    )
    
    1,200Net
      cash provided by (used in) financing activities
    
    
    1,447
    
    
    252Increase
      in cash and cash equivalents
    
    
    922
    
    
    574Cash
      and cash equivalents, beginning of period
    
    
    220
    
    
    540Cash
      and cash equivalents, end of period
    
    $
    1,142
    
    $
    1,114
 
 See
accompanying notes to financial statements.
 
 (continued)
 
 5
 
 RAYBOR
MANAGEMENT INC.
 STATEMENTS
OF CASH FLOWS
 For the
three months ended March 31, 2005 and 2004
 
 (unaudited)
 
 (000’s
omitted)
 
 Supplemental
Schedule of Non-Cash Activities
 Three
      months endedMarch
      31, 2005
    
    March
      31, 2004Supplemental
      Schedule of Non-Cash Investing and Financing Activities:Value
      of warrants issued
    
    $
    449
    
    
    -
 
 See
accompanying notes to financial statements.
 
 6
 ****
 **1.**
    **Summary
      of Significant Accounting Policies**
 
 COMPANY
OVERVIEW
 
 Raybor
Management Inc. (“the Company” or “Raybor”) was incorporated in Delaware on
March 3, 2000 to serve as a vehicle to effect a merger, exchange of capital
stock, asset acquisition or other business combination with a domestic or
foreign private business.
 
 Raybor is
a holding company owning subsidiaries engaged in a number of diverse activities.
On June 1, 2003, the Company acquired all of the issued and outstanding shares
of capital stock of four corporations in exchange for the issuance of shares of
the Company’s common stock. The acquired corporations, which are now
wholly-owned subsidiaries of the Company, are IC Marketing, Inc., a Nevada
corporation (“ICM”), American Consumer Publishing Association, Inc., an Oregon
corporation (“ACPA”), Back 2 Backs TM Inc., an
Oregon corporation (“B2B”) and Freedom Financial, Inc., an Oregon corporation
(“Freedom”). ICM and ACPA are in the magazine subscription business. B2B is in
the business of operating medical clinics for pain management, with an emphasis
on the treatment of lower back disorders through a new technology called spinal
decompression. Freedom is in the business of providing account receivable
factoring, equipment lease financing, business loans and other financial
advisory services to third parties.
 
 The
acquisition of ICM, ACPA, B2B, and Freedom was conducted as a rollup with ICM
and ACPA as the acquiring entities in accordance with SEC Staff Accounting
Bulletin No. 97, “Accounting and Disclosure for Rollups of Businesses.”
Effective with the acquisition, ICM and ACPA have fully consolidated their
financial activity with B2B and Freedom.
 
 During
2004, the Company entered into a joint venture partnership to form Paincare
Medical Services, LLC which is a variable interest entity associated with the
Company’s medical services division and the Company is the primary beneficiary.
In accordance with FIN 46, the partnership has been consolidated in the
Company’s financial statements. The partnership has assets of $244 and $198 and
nonrecourse debt of $266 and $11 as of March 31, 2004 and December 31, 2004,
respectively.
 
 During
2004, two variable interest entities contracted to receive management services
from the Company’s medical services division. The contracting entities were
consolidated in the Company’s consolidated financial statements in accordance
with FIN 46. The contractors have combined assets of $393 and $155 and
nonrecourse debt of $76 and $16 as of March 31, 2005 and December 31, 2004,
respectively.
 Basis
of presentation
 
 These
unaudited consolidated financial statements represent the financial activity of
the combined Company as of March 31, 2005. The consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and in accordance with the instructions to
Form 10-QSB and Rule 10-01 of Regulation S-X. Accordingly, the financial
statements do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. For
further information, refer to the annual financial statements and footnotes
filed thereto included in the Company’s form 10-KSB filing on December 31, 2005.
 
 7
 
 Earnings
per share
 
 The
Company discloses “basic” and “diluted” earnings (loss) per share. Basic
earnings (loss) per share are computed by dividing net income (loss) by the
weighted average number of common shares outstanding during each period. Diluted
earnings (loss) per share are similar to basic earnings (loss) per share except
that the weighted average number of common shares outstanding is increased to
reflect the dilutive effect of potential common shares, such as those issuable
upon the exercise of stock options or warrants, and the conversion of preferred
stock.
 
 The
computations of basic net earnings per share and diluted net earnings per share
for 2005 and 2004 are:
 
 2005
    
    2004Net
      earnings from continuing operations
    
    $
    (44
    )
    $
    438Basic
      weighted average shares
    
    
    58,419
    
    
    34,608Effective
      of dilutive securities:Warrants
    
    
    1,289
    
    
    0Dilutive
      potential common shares
    
    
    59,708
    
    
    34,608Net
      earnings per share from continuing operationsBasic
    
    $
    0.0
    
    $
    0.1Diluted
    
    $
    0.0
    
    $
    0.1
 
 8
  Disclosure
about Segments of an Enterprise and Related Information
 
 SFAS No.
131, “Disclosures about Segments of an Enterprise and Related Information,” was
issued by the FASB in 1997. This statement requires public enterprises to report
financial and descriptive information about reportable operating segments, and
establishes standards for related disclosures about products and services,
geographic areas, and major customers. The Company has identified its three
primary operating segments as 1). Direct mail marketing. 2). Medical services.
3). Financial services. Segment revenue for the three-month periods ended March
31, 2005 and 2004 are as follows:
  Three
      months endedMar.
      31,2005
    
    Mar.
      31, 2004Segment
      Revenues:Direct
      mail marketing
    
    $
    4,039
    
    $
    3,342Medical
      services
    
    
    1,679
    
    
    637Financial
      services
    
    
    6
    
    
    137Total
      revenues
    
    $
    5,724
    
    $
    4,116Segment
      Operating Profit / (Loss):Direct
      mail marketing
    
    $
    1,645
    
    $
    1,584Medical
      services
    
    
    (846
    )
    
    (404
    )Financial
      services
    
    
    (44
    )
    
    15Other
      (corporate)
    
    
    (628
    )
    
    (265
    )-Total
      operating profit
    
    $
    127
    
    $
    930
 
 The
Company has no export sales or international operations.
 
 Comprehensive
Income (Loss)
 
 The
Financial Accounting Standards Board issued Statement of Financial Accounting
Standards No. 130, “Reporting Comprehensive Income” (SFAS 130). This
pronouncement established standards for reporting and display of comprehensive
income (loss) and its components in a full set of general-purpose financial
statements. Comprehensive income consists of net income and unrealized gains
(losses) on available-for-sale securities; foreign currency translation
adjustments; changes in market values of future contracts that qualify as a
hedge; and negative equity adjustments recognized in accordance with SFAS No.
87. The Company, however, does not have any components of comprehensive income
(loss) as defined by SFAS 130 and therefore, for the three-month periods ended
March 31, 2005 and 2004, comprehensive income is equal to the Company’s
reportable income.
 
 Cash
and Cash Equivalents
 
 For
purposes of the statement of cash flows, the Company considers all highly liquid
investments purchased with an original maturity of three months or less to be
cash equivalents. As of March 31, 2005, the entire cash balance consists of cash
on deposit.
  9
 Income
Taxes
 
 The
Company accounts for income taxes under the Financial Accounting Standards Board
of Financial Accounting Standards No. 109, “Accounting for Income Taxes”
(“Statement 109”). Under Statement 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax basis. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the periods in
which those temporary differences are expected to be recovered or settled. Under
Statement 109, the effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the enactment
date. The Company has accrued federal and state income taxes at the effective
tax rate of 41% during 2005.
 
 **2.**
    **Financing
      Arrangement**
 
 On
January 3, 2005, the Company entered into a Securities Purchase Agreement (the
Loan Agreement) with C3 Capital Partners, LP (“C3”). The maximum amount that may
be borrowed under the Loan Agreement is $4,500. Borrowings will bear interest of
12% per annum.
 
 In
January 2005 (the “Closing Date”), the Company issued to C3 an initial 12%
Secured Note in the principal amount of $1,500 with a maturity date of 1/1/2010,
and a warrant to purchase 1,272,227 shares of the Company’s common stock at an
exercise price of $0.0001 per share. The Warrants are exercisable at the
discretion of the note holder in whole or in part at any time before the later
of the tenth anniversary of the issuance of the warrants or the date on which
all principal and interest on the Notes is indefeasibly paid in full. The
Company intends to use the proceeds for general corporate purposes, including
working capital and equipment purchases, and to finance the opening of new
medical clinics.
  The Loan
Agreement provides for an additional two borrowings aggregating to $3,000 at the
option of the Company through January 3, 2006. In connection with these
additional borrowings, the Company must issue an additional 2,544,454 warrants
to purchase shares of the Company’s common stock at a nominal price. If on the
anniversary of the Closing Date the Company has not sold to C3 Notes with
aggregate original principal amounts of at least $2,250,000.00, the Company must
issue and sell to C3 for a nominal amount an additional Warrant equal to an
amount that would entitle C3 upon its exercise and upon the exercise of all
previously-issued Warrants to acquire that amount of the Company’s common stock
equal to at least 5% of the then outstanding fully diluted common stock of the
Company, as of the Closing Date.
 
 Under the
terms of the Loan Agreement, the Company also granted to the note holder a
security interest in all of the Company’s right, title and interest in all of
its property, wherever located, whether such property of right, title, or
interest is now owned or existing or subsequently acquired. Additionally, the
Company has pledged all the shares of its wholly owned subsidiaries as
collateral. The Loan Agreement has various covenants, which the Company must
adhere to for it to be not in default. If a covenant is breached and it is
deemed to have a material adverse effect on operations, the Company has 15 days
to cure the breach. In General, other “Events of Default” may require that they
be cured anywhere from 5 business days to 30 calendar days. The Company incurred
closing fees of $98 related to this Loan Agreement. The Company incurred legal,
accounting, and other fees and expenses in connection with the Loan Agreement.
 
 10
 
 The
Company incurred additional issuance costs in the form of a warrant to purchase
11,321 shares at an exercise price of $.0001 per share. The Company issued the
warrant to Broadmark Capital, LLC (“Broadmark”).
 
 Total
funds received of $1,500 were allocated $1,001 to the 12% note and $449 to the
warrants. The value allocated to the note warrants are being amortized to
interest expense over the term of the notes.
  **3.**
    **Lease
      Commitments**
 
 The
Company entered into a lease agreement for the rental of office and clinic space
for its medical services division in the first quarter of 2005 at Century City,
California. The monthly base rent is $7, the term of the lease is nineteen
months and the space is approximately 3,000 square feet.
 
 **Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations**
 
 **Results
of Operations:**
 **Fiscal
Year Ended December 31, 2004 Compared With Fiscal Year Ended December 31,
2003**
 
 **(in
thousands)**
 
 For the
quarter ended March 31, 2005, the Company generated consolidated revenues of
$5.7 million as compared to $4.1 million, representing an increase of 39% in
revenues. The increase is attributable to the increase in the number of direct
mail subscription offers solicited in first quarter of 2005 as compared to the
previous year’s first quarter and an increase in volume of patient services
provided by the Company’s medical services division. The Company’s direct mail
marketing division solicited 6.4 million offers in the first quarter as compared
to 4.9 million offers in previous year’s first quarter, representing an increase
of 31%. The Company’s medical division saw a revenue increase of $1 million over
the previous year’s first quarter due to the number of fully operational medical
clinics which increased from six in the first quarter of 2004 to fourteen as of
March 31, 2005.
 
 Cost of
sales for the direct mail division increased to $1.7 million for the quarter
ended March 31, 2005 as compared to $1.3 million in the previous year’s quarter,
representing an increase of 31%. The increase is mainly a result of increasing
the number of direct mail subscription offers delivered in the quarter ended
March 31, 2005 as compared to the previous year’s first quarter as noted above.
The Company’s medical division cost of sales increased to $845 thousand for the
period ended March 31, 2005 as compared to $342 thousand in the previous year’s
quarter. This represents an increase of 146%, which is attributable to the
opening of additional clinics, which increased the number of fully operational
clinics to fourteen for the first quarter of 2005 as compared to six for the
first quarter of the previous year.
 
 Although
the per-unit cost of direct mail offers was $0.26 in the first quarter of 2005
and $0.28 in the first quarter of 2004, the Company mailed approximately 1.5
million additional offers for the period ended March 31, 2005 as compared to the
previous year’s quarter, representing an increase of 31%. As a result, the
direct mail cost of sales was $1.7 million in the first quarter of 2005 as
compared to $1.3 million in the first quarter of the prior year.
 
 11
 
 Overall
operating expenses increased to $3.1 million for the period ended March 31, 2005
versus $1.5 million for the previous year’s first quarter, representing an
increase of 100%. This is primarily due to an increase in selling, general and
administrative costs and payroll of $1 million associated with the expansion of
the Company’s medical division.
 
 The
Company generated operating profit of $127 thousand for the period ended March
31, 2005 as compared to operating profit of $930 thousand in the previous year’s
quarter, representing a decrease of 86%. The decrease in operating profit is
primarily due to the expense related to the expansion of the Company’s medical
division. During the period ended March 31, 2005, the Company’s medical services
division had a net operating loss of $847 thousand compared to a net operating
loss of $404 thousand in the previous year’s quarter. Unallocated operating
expense from overhead was $628 thousand for the period ended March 31, 2005 as
compared to $265 thousand in the previous year’s quarter resulting in an
increase of 137%. The Company added two corporate marketing positions to support
its strategic marketing efforts and implemented an employee benefits program,
contributing to the expense variance from the first quarter of the prior year to
the first quarter of 2005. In addition, legal and broker fees were incurred in
the first quarter of 2005 in order to obtain financing of $1.5 million from C3
Capital Partners, L.P.
 
 Liquidity
and Capital Resources
 
 On March
31, 2005, the Company had assets of $11.0 million compared to $8.7 million on
December 31, 2004. During the first quarter of 2005, the Company raised $1.5
million in debt financing for the purpose of expanding its direct mail marketing
business and its medical services division. The resulting increase in cash was
offset by investments in the direct mail marketing division’s list database and
the expansion of the medical services division. In addition, accounts receivable
from the medical services division increased by $800 thousand due to increased
volume of services during the first quarter of 2005. Fourteen clinics are
currently fully operational as compared to six in the first quarter of
2004.
 
 The
Company had total stockholders’ equity of $3.3 million at March 31, 2005 as
compared to $2.9 million at December 31, 2004. This increase of $.4 million is
primarily due to a non-cash adjustment to record a discount on the loan
financing associated with the issuance of warrants.
 
 Accounts
payable and bank overdraft increased to a combined total of $1,271 thousand at
March 31, 2005 compared to $963 thousand the previous quarter, representing an
increase of $308 thousand. This was primarily due to an increase in accounts
payable of the Company’s direct mail marketing division, which is attributable
to the increase in the number of direct mail solicitations mailed during the
first quarter of 2005 as compared to the same quarter in the previous
year.
 
 Deferred
revenue of the direct mail marketing division increased $352 thousand from the
prior year’s first quarter as a result of the increase in direct mail
solicitations mailed during the first quarter of 2005 compared to the same
quarter in the prior year.
 
 Long term
debt increased from $1.3 million at the end of fiscal year 2004 to $2.4 million
at March 31, 2005 as a result of increased financing to expand the direct mail
marketing division’s and the medical services division’s operations of $1.5
million. This increase was offset by a non-cash adjustment to discount the loan
for warrants issued to the lender for $.4 million.
 
 Net cash
used by operating activities was $389 thousand in the first quarter of 2005
primarily due to a decrease in operating profit in the medical services division
of $442 and an increase in corporate overhead expense of $363 as compared to the
first quarter of the prior year.
 
 12
 
 Net cash
provided by (used in) investing activities was ($136) thousand and $480 thousand
for the first quarter of 2005 and 2004 respectively. This decrease is primarily
due to the insolvency of clients of the financial services division and a
resulting decrease in payments received on notes receivable.
 
 Net cash
provided by financing activities was $1.5 million and $.3 million for 2005 and
2004, respectively. During the first quarter of 2005 the Company obtained
financing of $1.5 million to support the expansion of its direct marketing
division and the medical services division.
 
 Item 3.
Risk Factors Relating to the Company’s Business:
 
 **Direct
Mail marketing:**
 
 1.
    Individual
      publishers can cease using ICM to solicit subscriptions for their
      magazines when it is in their interest to do so. Publishers need paid
      subscribers to validate their worth to advertisers. Sales agents play the
      role of consumer marketing arms for publishers. When, however, a publisher
      doesn’t need sales agents for specific publications during a specific time
      period, the publisher will stop using the agent without any downsizing
      expense. Such actions on a repeated basis would likely materially and
      negatively affect cash flow, financial condition and results of
      operations.  2.
    The federal government may place more
      substantial regulations on direct mail, as it has on telemarketing, which
      may cause it to be far less profitable to operate direct mail
      businesses.  3.
    Individual state agencies may try to regulate
      direct marketing within their jurisdictions, creating a far more complex
      and time-consuming regulatory environment in which to run a
      business.  4.
    Postal costs may rise and individual companies
      have very little, if any, ability to affect the timing or degree of those
      cost increases. These cost increases directly affect the operating profits
      of the company.  5.
    Publishers may require more substantial
      remittance fees, which will have a direct impact on the revenues ICM
      earns. The level of remittance fees is determined purely on market
      dynamics, and can fluctuate substantially within a short period of
      time.
  **Medical
Services:**
 
 1.
    The
      Company’s business model may not translate into other markets due to
      variation in market size and make-up, reimbursement rate and acceptability
      by insurers, and our ability to successfully market the service in varying
      locations.
 
 2.
    Insurance coverage could be reduced or
      eliminated by the government or insurers. The Company is dependent on
      insurance reimbursement from Medicare and private insurance carriers. A
      reduction or elimination of the reimbursement rate would likely negatively
      and materially affect the Company’s
profitability.
  13
  3.
    Transitioning from 12 facilities to 20+ may
      present management problems the current management team cannot foresee or
      handle. Expanding too quickly may strain the Company’s financial and
      managerial resources.
 
 4.
    Competition may arise from strong, well-funded
      competitors. There is no guarantee that competitors will not be able to
      duplicate our treatment methodology and directly compete with the Company
      in its present and anticipated markets.
 
 5.
    Patient litigation may arise from the use of
      the DRX spinal decompression system. As in many medical procedures, there
      is an inherent risk of patient litigation, which if successful could
      negatively affect the profitability of the
Company.
  **Financial
Services:**
 
 **1.**
    Parties
      responsible for the payment of invoices that Freedom Financial has
      purchased are no longer capable of paying certain invoices and Freedom
      Financial’s clients are not capable of refunding the invoice amount to
      Freedom Financial. During 2004, $1.5 million of receivable balances were
      written off as bad debt expense due to uncollectibility. $1.1 million of
      which was due from a major client, which filed for bankruptcy in September
      2004.  **2.**
    The regulatory environment could become much
      more restrictive regarding factoring or the financial requirements imposed
      by state and federal authorities, which could negatively affect future
      revenues and profitability.  **3.**
    Banks could become more liberal in their
      credit policies and create more competition for us.  **4.**
    Growth could be limited by the lack of
      available capital from internal operations, the parent company or
      independent third party sources. Expansion of the Company’s factoring
      business beyond its present level will require access to additional
      capital.
  **Item
4. Controls and Procedures.**
 
 As of the
end of the period covered by this report, an evaluation was performed under the
supervision and with the participation of the Company’s management, including
the President and Chief Executive Officer and the Chief Financial Officer, of
the effectiveness of the design and operation of the Company’s disclosure
controls and procedures. Based on that evaluation, the Company’s management,
including the Chief Executive Officer and the Chief Financial Officer, concluded
that the Company’s disclosure controls and procedures were effective. There have
been no significant changes in the Company’s internal controls or in other
factors that could significantly affect internal controls subsequent to March
31, 2005.
  14
 
 **PART
II - OTHER INFORMATION**
 
 **Item
1.**  **Legal Proceedings**
 
 ****  None
 
 **Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds**
 
 On
January 6, 2005, in connection with the Loan Agreement, the Company issued to
Broadmark a warrant to acquire 11,321 shares of common stock of the Company as
compensation for their broker services. The number of shares purchasable under
the warrant is subject to certain anti-dilution adjustments. The warrant has an
exercise price of $0.0001 per share. The warrant is exercisable at the
discretion of Broadmark in whole or in part or any time and expires on January
6, 2008. The issuance of the warrant was exempt from the registration
requirements under the Securities Act of 1933 pursuant to Section 4(2) thereof
and in reliance upon Rule 506 of Regulation D promulgated by the Securities and
Exchange Commission.
 
 Additional
unregistered sales of equity securities during the reporting period have been
previously reported on Form 8-K.
 
 **Item
3. Defaults Upon Senior Securities**
 
 None
 
 **Item
4. Submission of Matters to a Vote of Security Holders**
 
 **** None
 
 **Item
5.**  **Other Information**
 
 Effective
January 6, 2005 the Company entered into an employment agreement with the
President of ACPA, Tracy Friend, Ms. Friend is also a director of the Company.
Pursuant to the agreement, Ms. Friend will receive a minimum fixed monthly
salary of $6,000, which the board of directors may raise at any time. In
addition, Ms. Friend will receive a quarterly bonus of $10,000 if the Company
achieves certain performance goals. Ms. Friend will also receive 50,000 shares
of the Company’s common stock at the completion of the calendar year 2005. The
initial term of the agreement expires on December 31, 2005, but will be
automatically renewed annually if neither the Company nor Ms. Friend gives
notice of termination under the terms of the agreement. If Ms. Friend’s
employment is terminated by the Company without cause as defined in the
agreement, or Ms. Friend resigns for certain enumerated good reasons, she will
receive one month’s severance pay.
 
 Effective
January 6, 2005 the Company entered into an employment agreement with the
President of B2B, Steve Pugsley, Mr. Pugsley is also a director of the Company.
Pursuant to the agreement, Mr. Pugsley will receive a minimum fixed monthly
salary of $6,000, which the board of directors may raise at any time. In
addition, Mr. Pugsley will receive a quarterly bonus of $10,000 if the Company
achieves certain performance goals. Mr. Pugsley will also receive 100,000 shares
of the Company’s common stock at the completion of the calendar year 2005. The
initial term of the agreement expires on December 31, 2005, but will be
automatically renewed annually if neither the Company nor Mr. Pugsley gives
notice of termination under the terms of the agreement. If Mr. Pugsley’s
employment is terminated by the Company without cause as defined in the
agreement, or Mr. Pugsley resigns for certain enumerated good reasons, she will
receive one month’s severance pay.
 
 On
January 3, 2005, in connection with the Loan Agreement, the Company issued to
Broadmark a warrant to acquire 11, 321 shares of common stock of the Company as
described above in Part II, Item 2.
 
 15
 ****
 **Item
6.**  **Exhibits**
  (a)
    Exhibits.  10.1
    $1.5
      Million 12% Secured Note issued January 6, 2005.10.2
    Warrant
      to Purchase Shares of Common Stock, issued January 6, 2005, Certificate
      No. W-1.10.3
    Warrant
      to Purchase Shares of Common Stock, issued January 6, 2005, Certificate
      No. W-2.10.4
    Shareholders
      Agreement dated January 3, 2005, among Raybor Management, Inc., C3 Capital
      Partners, L.P., Jeffrey Hoyal and Dennis Simpson.10.5
    Securities
      Purchase Agreement Dated January 3, 2005 among C3 Capital Partners, L.P.
      as Purchaser and Raybor Management, Inc., IC Marketing, Inc., American
      Consumer Publishing Association, Inc. and Back 2 Back’s, Inc. as
      Issuers.10.6
    Security
      Agreement dated January 3, 2005, by and among IC Marketing, Inc., American
      Consumer Publishing Association, Inc., Raybor management, Inc. and Back 2
      Back’s, Inc., and C3 Capital Partners, L.P.10.7
    Jeffrey
      D. Hoyal Employment Agreement dated January 6, 2005.10.8
    Noel
      M. Littlefield Employment Agreement dated January 6,
  2005.10.9
    Ryan
      C. Azares Employment Agreement dated January 6, 2005.10.10
    Noreen
      Ackermann Employment Agreement dated January 6, 2005.10.11
    Steve
      Pugsley Employment Agreement dated January 6, 2005.10.12
    Tracy
      Friend Employment Agreement dated January 6, 2005.31.1
    Certification
      of President and Chief Executive Officer pursuant to section 302 of the
      Sarbanes-Oxley Act of 2002.31.2
    Certification
      of Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley
      Act of 2002.32.1
    Certification
      of President and Chief Executive Officer and Chief Financial Officer
      pursuant to section 906 of the Sarbanes-Oxley Act of
  2002.
  16
 
 **SIGNATURES**
 
 In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned thereunto duly
authorized.
 
 RAYBOR MANAGEMENT
      INC.Date: May 20,
2005
    By:
    /s/ Jeffrey D. HoyalJeffrey D. HoyalPresident and Chief Executive Officer ****Date: May 20,
2005
    By:
    /s/ Noel M.
    LittlefieldNoel M. LittlefieldChief Financial
  Officer
  17