SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date of Report (Date of earliest event reported): September 20, 2004
PHC, Inc.
(Exact Name of Registrant as Specified in its Charter)
Massachusetts
(State of Incorporation or Organization)
0-22916 04-2601571
(Commission File Number) (I.R.S. Employer
Identification No.)
200 Lake Street, Suite 102, Peabody, Massachusetts 01960
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (978) 536-2777
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
___ Written communications pursuant: to Rule 425 under the Securities Act (17
CFR 230.425)
___ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
___ Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
___ Pre-commencement communications pursuant to Rule 13c-4 (c) under the
Exchange Act (17 CFR 240.13e-4 (c))
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Item 1.01. Entry into a Material Definitive Agreement
On September 20, 2004, the Company entered into an agreement pursuant
to which the Company has the option to require an investor to purchase 526,316
shares of a new series of preferred stock from the Company for $1,500,000. The
Company paid $10,000 in cash to the investor as consideration for the investor's
binding obligation to purchase the preferred stock. If the Company does not
close on this transaction by November 1, 2004, all rights and obligations under
the agreement will be null and void. The agreement was entered into to enable
the company's auditors to issue an opinion which did not contain a going concern
qualification. The Company does not anticipate that it will close on this
agreement since it believes that it will reach an agreement with its long-term
lender.
The preferred stock, if issued, would be convertible into shares of
common stock at the option of the Company at the rate of three shares of common
stock for each share of preferred stock, equivalent to $1.12 per share, would
vote as one class with the common stock with three votes per share, would be
entitled to cumulative dividends of 8% of the stated value of each share of
preferred stock, which is $3.36 per share, from the date of issuance and would
be subject to normal adjustments in the event of mergers, consolidations or
liquidations. The form of certificate of designation is filed as an exhibit with
this form 8-K.
Item 3.02. Unregistered Sales of Equity Securities
See Item 1.01
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Item 9.01. Financial Statements and exhibits
(c) Exhibits
10.37 Subscription agreement entered into September 20, 2004 by and between
PHC, Inc. and Sandor Capital Master Fund, LP, together with the
registration rights agreement and the form of certificate of
designation.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PHC, INC.
Date: September 23, 2004 By: /s/ Bruce A. Shear
______________________
Bruce A. Shear
President
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