8-K

                                  UNITED STATES
                       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): June 13, 2007


                                    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:

     [  ] 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 13e-4(c) under the
          Exchange Act (17 CFR 240.13e-4c))

                                       1

Item 1.01.  Entry into a Material Definitive Agreement

     On June  13,  2007,  the  Company  entered  into an  amended  and  restated
revolving credit,  term loan and security agreement with CapitalSource  Finance,
LLC to replace the  Company's  current  agreement  with the same lender to lower
interest rates and provide additional liquidity.  Each of the Company's material
subsidiaries,  other than Pivotal Research Centers,  Inc, is a co-borrower under
the  agreement.  The agreement  includes a term loan in the amount of $3,000,000
and an accounts  receivable  funding  revolving  credit agreement with a maximum
loan amount of $3,500,000.  The $3,000,000 term loan will be used to pay-off the
balance of the  current  term loan of  approximately  $250,000,  with  remaining
amount available to be drawn as needed.

     The term loan calls for interest at the prime rate plus  three-quarters  of
one percent (0.75%), but not less than 6.25%, with monthly principal payments of
$50,000  beginning July 1, 2007 through June 30, 2009, and increasing to $62,500
each month through October 2011, the maturity date of the term loan.

     The revolving credit note carries interest at prime plus one-quarter of one
percent (0.25%), but not less than 4.75% paid through lock box payments of third
party accounts  receivable.  The revolving credit term is four years,  renewable
for two additional one-year terms.

         Pursuant to the security agreement, all of the assets of the Company
and its material subsidiaries, other than Pivotal Research Centers, Inc., secure
the obligations under the term loan note and the revolving credit note,
including a first mortgage on PHC of Michigan Inc.'s real property, a second
mortgage on PHC of Virginia Inc.'s real property, and a leasehold mortgage on
PHC of Utah, Inc.'s leasehold interests.

     In connection with this transaction the Company paid approximately  $40,000
in  commitment  and loan  origination  fees that will be amortized as additional
interest over the term of the agreement.  Supplemental  to the loan and security
agreement,  the Company issued a warrant to purchase 250,000 shares of PHC, Inc.
Class A common  stock at an  exercise  price of $3.09 per share.  The warrant is
exercisable,  in whole or in part,  until June 13, 2017,  and contains  standard
adjustment  provisions for dilution.  The documents evidencing this transaction,
that is, the Amended  and  Restated  Revolving  Credit,  Term Loan and  Security
Agreement,  as well as the Warrant,  will be filed as exhibits to the  Company's
annual report on form 10-K.

     A copy of PHC,  Inc.'s press  release  announcing  the amended and restated
agreement is attached hereto as Exhibit 99.1 and is incorporated  herein by this
reference.


Item 9.01  Financial Statements and Exhibits.

      (d) The following exhibit is being furnished herewith:

Exhibit No.    Exhibit Description

     99.1      Press release issued by PHC, Inc. on June 18, 2007.


                                       2

                                                  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:  June 18, 2007                              By:  /s/ Bruce A. Shear
                                                  ____________________________
                                                           Bruce A. Shear
                                                           President


                                       3

EX-99

Exhibit 99.1
           PHC, INC. DECREASES COST OF CAPITAL AND EXPANDS CREDIT LINE

                Strong Balance Sheet and Favorable Credit History
                  Enables PHC to Negotiate Lower Interest Rate

FOR IMMEDIATE RELEASE

Company Contact:           Investor Relations Contact:
- ---------------            --------------------------
PHC, Inc.                  Hayden Communications, Inc.
Bruce A. Shear             Brett Maas or Peter Seltzberg
(978) 536-2777            (646) 415-8972

Peabody,  Mass.,  June 18, 2007 -- PHC, Inc., d.b.a.  Pioneer  Behavioral Health
(AMEX:  PHC), a leading provider of inpatient and outpatient  behavioral  health
services, today announced that it has successfully renegotiated and extended its
relationship with  CapitalSource,  resulting in an expanded bank line which will
now total $6.5 million at a lower  interest rate  consistent  with  conventional
bank  borrowing  compared to its prior  arrangement.  The new $6.5  million loan
consists of a $3.5 million  revolving line of credit and a $3 million term loan,
to be drawn as needed, and will have a maturity date of October 2011.

Bruce A. Shear, President and Chief Executive Officer of Pioneer Behavioral
Health, commented, "Our consistent financial performance, stronger balance
sheet, and positive outlook enabled us to reduce our interest expense and expand
our credit line, which will help us to accelerate our growth. We are pleased to
continue our relationship with CapitalSource, and gratified that they have shown
this level of confidence in PHC and its business plan."

Keith Reuben, Co-President of CapitalSource's healthcare and specialty finance
business added, "We are delighted to expand our long-term relationship with
Pioneer. We have been doing business with this management team for many years,
and we are pleased to support their continued growth as we continue to expand
our loan portfolio."

About CapitalSource

CapitalSource is a leading commercial  lending,  investment and asset management
business  focused  on the middle  market.  As of March 31,  2007,  CapitalSource
managed an $18.3 billion  portfolio,  including  $9.5 billion in its  commercial
lending  and  investing  business,  $5.6  billion  in its  residential  mortgage
investment  business,  and $3.0  billion  managed  on behalf  of third  parties.
Headquartered  in Chevy  Chase,  Maryland,  the  company has  approximately  540
employees  in  offices  across  the  United  States  and  in  Europe.  For  more
information, visit http://www.CapitalSource.com.

About Pioneer Behavioral Health

Pioneer   Behavioral  Health  operates  companies  that  provide  inpatient  and
outpatient  behavioral health care services,  clinical research and Internet and
telephonic-based   referral  services.  The  companies  contract  with  national
insurance  companies,  government  payors,  and major  transportation and gaming
companies, among others, to provide such services. For more information,  please
visit www.phc-inc.com or www.haydenir.com.


                                       4

Statement under the Private Securities Litigation Reform Act of 1995:

Statement under the Private Securities Litigation Reform Act of 1995: This press
release may include  "forward-looking  statements" that are subject to risks and
uncertainties.  Forward-looking statements include information about possible or
assumed future  results of the operations or the  performance of the company and
its future plans and objectives.  Various future events or factors may cause the
actual results to vary materially  from those  expressed in any  forward-looking
statements  made in this press  release.  For a discussion  of these factors and
risks,  see the company's annual report on Form 10-K for the most recently ended
fiscal year.


                                       5