4

                                     
                               UNITED STATES
                    SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549
                                     
                                 FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934 For the quarterly period ended September 12, 1997.
                                     
                                    OR
                                     
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
    EXCHANGE ACT OF 1934 For the transition period from     to     .

Commission file number  0-27258
                                     

                            SAGEBRUSH, INC.
          (Exact name of registrant as specified in its charter)

    NORTH CAROLINA                                   56-1875714
(State or other jurisdiction of                   (I.R.S. Employer
incorporation or organization)                  Identification No.)
                                     
3238 West Main Street, Claremont, N.C.                 28610
(Address of principal executive offices)             (Zip Code)
                                     
Registrant's telephone number, including area code:  (704) 459-0821
                                     
                              Not Applicable
(Former name, former address and former fiscal year, if changed since last
                                  report)
                                     
                                     
Indicate  by  check mark whether the registrant (1) has filed  all  reports
required to be filed by Section 13 or 15(d) of the Securities Exchange  Act
of 1934 during the preceding 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 stock, as of the latest practicable date.

         Class                      Outstanding at October 10, 1997
Common Stock (no par value)                    5,925,000

                                     
                                     
                          PAGE 1 of   13   PAGES
                                     

                              SAGEBRUSH, INC.
                                     
                           - TABLE OF CONTENTS -
                                     
                                     
PART I Financial Information:                                         Page No.

    Item 1:  Financial Statements

    Consolidated Balance Sheets as of September 12, 1997
    and January 3, 1997.                                                   3

    Consolidated Statements of Current and Retained Earnings
    for the twelve weeks and thirty-six weeks ended
    September 12, 1997 and September 6, 1996.                              4

    Consolidated Statements of Cash Flows for the thirty-six weeks
    ended September 12, 1997 and September 6, 1996.                        5

    Notes to Consolidated Financial Statements.                            6

    Item 2.  Management's Discussion and Analysis of Financial
             Condition and Results of Operations.                       7-11

    Item 3.  Quantitative and Qualitative Disclosure about Market Risk    11

PART II  Other Information

    Item 6.  Exhibits and Reports on Form 8-K                             12



Signatures                                                                13


                     SAGEBRUSH, INC. AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
                  September 12, 1997 and January 3, 1997

                                            September 12,     January 3,
                                                 1997            1997
                                             (unaudited)
                                  ASSETS
Current assets:
   Cash and cash equivalents                $  1,718,301    $  1,570,515
   Related party receivables                      21,845          24,175
   Other receivables                             149,797         250,761
   Inventories                                   563,872         495,848
   Pre-opening costs, net                        537,988         509,210
   Prepaid and other current assets               53,198          80,613
      Total current assets                     3,045,001       2,931,122

Property and equipment, net                   18,650,315      14,262,732

Other assets                                      10,080          11,293

Total assets                                $ 21,705,396    $ 17,205,147

                   LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Note payable to bank                     $  1,393,750    $    460,000
   Current portion of long-term debt             181,760            -
   Accounts payable                            2,187,073       1,688,867
   Accrued salaries                              575,260         283,467
   Taxes other than income                       431,820         313,010
   Other accrued liabilities                     622,967         462,807
      Total current liabilities                5,392,630       3,208,151

Long-term debt                                 2,320,287            -

Deferred income taxes                            245,971         208,471

      Total liabilities                        7,958,888       3,416,622

Shareholders' equity:
   Common stock                                5,925,000       6,300,000
   Additional paid-in capital                  5,760,318       7,369,068
   Retained earnings                           2,061,190         119,457
      Total shareholders' equity              13,746,508      13,788,525

Total liabilities and shareholders' equity  $ 21,705,396    $ 17,205,147

       See accompanying notes to consolidated financial statements.


                     SAGEBRUSH, INC. AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF CURRENT AND RETAINED EARNINGS
Twelve Weeks and Thirty-six Weeks ended September 12, 1997 and September 6, 1996
(unaudited)

<TABLE>
<HEADING>
                                                  12 Weeks Ended           36 Weeks Ended
                                            Sep 12, 1997  Sep 6, 1996 Sep 12, 1997  Sep 6, 1996
<C>                                        <S>          <S>          <S>          <S>
REVENUES - restaurant sales                  $12,288,463  $10,050,955  $34,458,657  $26,815,083

OPERATING COSTS AND EXPENSES
Cost of restaurant sales                       4,533,691    3,746,412   12,778,759    9,778,589
Labor costs                                    3,476,290    2,721,340    9,534,052    7,219,775
Other operating expenses                       1,742,120    1,463,750    4,917,297    4,064,498
General and administrative expenses              870,607      839,055    2,516,034    2,257,372
Depreciation                                     317,111      228,945      918,312      637,123
Amortization (principally of pre-opening costs)  173,893       81,051      520,878      196,159
Total operating costs and expenses            11,113,712    9,080,553   31,185,332   24,153,516

OPERATING INCOME                               1,174,751      970,402    3,273,325    2,661,567

OTHER INCOME                                      10,200       18,050       47,498       60,400
INTEREST INCOME                                      205       29,626        1,288      104,892
INTEREST EXPENSE                                 (60,367)        (264)    (129,799)     (37,413)
  
INCOME BEFORE INCOME TAXES                     1,124,789    1,017,814    3,192,312    2,789,446
INCOME TAX PROVISION                            (439,920)    (386,769)  (1,250,579)  (1,059,989)

NET INCOME                                   $   684,869  $   631,045  $ 1,941,733  $ 1,729,457
 
NET INCOME  PER SHARE                        $      0.12  $      0.10  $      0.32  $      0.28

WEIGHTED AVERAGE SHARES
OUTSTANDING                                    5,925,000    6,300,000    6,143,865    6,283,730


RETAINED EARNINGS
   Balance at beginning of period            $ 1,376,321  $(1,241,363) $   119,457  $(1,451,587)
   Net income                                    684,869      631,045    1,941,733    1,729,457
   S corporation distribution and
      dividends paid                                -            -            -        (888,188)
   Balance at the end of period              $ 2,061,190  $  (610,318) $ 2,060,190  $  (610,318)
                                     
</TABLE>
       See accompanying notes to consolidated financial statements.


                     SAGEBRUSH, INC. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
Thirty-six Weeks ended September 12, 1997 and September 6, 1996 (Unaudited)
         
                                                     Thirty-six Weeks Ended
                                                  September 12,   September 6,
                                                       1997            1996
Cash Flows from Operating Activities:
Net income                                        $ 1,941,733     $ 1,729,457
Adjustments to reconcile net income to net cash
  provided by operating activities:
  Depreciation                                        918,312         637,123
  Deferred tax                                         37,500            -
  Amortization (principally of pre-opening costs)     520,877         196,159
  Changes in operating assets and liabilities
    providing (using) cash
    Receivables                                       103,294        (105,565)
    Inventories                                       (68,024)        (54,789)
    Pre-opening costs                                (549,656)       (487,216)
    Prepaid and other assets                           28,629         (54,252)
    Trade accounts payable and 
      other accrued liabilities                     1,068,969         647,878
    Total adjustments                               2,059,901         779,338
      Net cash provided by operating activities     4,001,634       2,508,795

Cash Flows from Investing Activities:
  Capital expenditures                             (5,305,895)     (4,018,090)

Cash Flows from Financing Activities:
  Proceeds from issuance of long-term debt          2,550,000            -
  Proceeds from bank debt                             933,750            -
  Reduction of debt                                   (47,953)     (2,187,909)
  Repurchase of common stock                       (1,983,750)           -
  Purchase of assets related to reorganization           -         (1,652,500)
  Cash paid to shareholders related to reorganization    -         (3,500,000)
  S Corporation distributions and dividends paid         -           (888,188)
  Proceeds from issuance of common stock                 -         11,394,391
      Net cash provided by financing activities     1,452,047       3,165,794

Net increase in cash and cash equivalents             147,786       1,656,499

Cash and cash equivalents at beginning of period    1,570,515       2,145,809

Cash and cash equivalents at end of period        $ 1,718,301     $ 3,802,308

Supplemental disclosure of cash flow information:
   Cash paid for interest                         $   129,799     $    37,149
   Cash paid for income taxes                     $   861,776     $   655,442

       See accompanying notes to consolidated financial statements.


                 Sagebrush, Inc. and Affiliated Companies
                     Notes to Consolidated Statements

Note  1:    The consolidated financial statements as of January 3, 1997 and
      September  12,  1997  and  for  the twelve-week  and  thirty-six-week
      periods  ended September 12, 1997 and September 6, 1996  include  the
      accounts   of  Sagebrush,  Inc.  and  its  wholly-owned  subsidiaries
      ("Sagebrush"). All intercompany accounts and transactions  have  been
      eliminated in consolidation and combination.

Note  2:   In the opinion of management, the accompanying financial
      statements (unaudited) contain all adjustments necessary to present
      fairly the financial position as of September 12, 1997, and the
      results of operations for the twelve-week and thirty-six-week
      periods ended September 12, 1997 and September 6, 1996 and cash
      flows for the thirty-six-week periods ended September 12, 1997 and
      September 6, 1996.

Note  3:   The results of operations for the twelve-week and thirty-six-
      week periods ended September 12, 1997 and September 6, 1996 are not
      necessarily indicative of results to be expected for the full year.
      Quarterly results are presented based on 12, 12, 12 and 16 or 17
      week quarters.

Note  4:   On May 12, 1997, the Company repurchased 375,000 shares of its
      Common Stock in a negotiated block purchase from an institutional
      investor at a price of $5.25 per share.

Note  5:   On September 25, 1997, Sagebrush, Inc. and WSMP, Inc. signed a
      letter of intent to pursue WSMP's acquisition of Sagebrush in a
      stock for stock merger of the two companies.  The proposed
      transaction is subject to various conditions, including the approval
      of Sagebrush's directors and shareholders. The proposed exchange
      rate is .3214 shares of WSMP common stock for each share of
      Sagebrush common stock.

Part I - Item 2

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF
       FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

   This  discussion  and  analysis should be read in conjunction  with  the
financial statements and the notes thereto included elsewhere in this  Form
10-Q  and  the  Company's Annual Report on Form 10-K  for  the  year  ended
January 3, 1997.

RESULTS OF OPERATIONS

   Quarterly  results are presented based on 12, 12, 12 and 16 or  17  week
quarters.  The  following table sets forth for the  periods  indicated  the
percentages  of  revenues - restaurant sales represented by  items  in  the
Company's consolidated statements of income.

                                Twelve Weeks Ended  Thirty-six Weeks Ended
                                               Sept 12, Sept 6, Sept 12, Sept 6,
                                                  1997    1996    1997    1996

Revenues - restaurant sales                      100.0%  100.0%  100.0%  100.0%
Operating costs and expenses:
  Cost of restaurant sales                        36.9    37.3    37.1    36.5
  Labor costs                                     28.3    27.1    27.7    26.9
  Other operating expenses                        14.2    14.6    14.3    15.2
  General  and administrative expenses             7.1     8.3     7.3     8.4
  Depreciation                                     2.6     2.3     2.7     2.4
  Amortization (principally of pre-opening costs)  1.3      .8     1.4      .7
   Total operating costs and expenses             90.4    90.3    90.5    90.1
Operating income                                   9.6     9.7     9.5     9.9
Other income (received from related parties)        .1      .2      .1      .2
Interest income                                     .0      .3      .0      .4
Interest expense                                   (.5)    (.0)    (.4)    (.1)
Income before income taxes                         9.2    10.1     9.2    10.4
Income tax provision                              (3.6)   (3.8)   (3.6)   (4.0)
Net income                                         5.6%    6.3%    5.6%    6.4%

Twelve  weeks  ended  September 12, 1997 compared  to  twelve  weeks  ended
September 6, 1996

   Revenues.   Restaurant sales increased 22.3% to $12.3  million  for  the
third quarter of 1997 as compared to $10.1 million for the third quarter of
1996.  The increase in sales was the result of an increase in the number of
restaurants operated at the end of the third quarter from 26 to 31,  offset
by  a  3.3% decrease in same store sales (stores open greater than eighteen
months  during  the third quarter of fiscal 1997). Much of the  same  store
sales  decline can be traced to restaurants in the tourist areas  of  North
Carolina  and Tennessee. These restaurants were disrupted by a  rock  slide
that  closed Interstate 40 at the state line for 11 of the 12 weeks in  the
quarter.

   Cost  of restaurant sales.  Cost of restaurant sales increased $787,000,
or 21.0%, from $3.7 million to $4.5 million and as a percentage of revenues
decreased  from  37.3% to 36.9%.  This decrease is due  in  part  to  lower
produce prices and operational changes.

  Labor costs.  Labor costs increased $755,000, or 27.7%, from $2.7 million
to  $3.5  million and as a percentage of revenues, increased from 27.1%  to
28.3%.  The increase in dollars and percent of revenue is primarily due  to
new  restaurants, which have higher initial labor costs, and changes in the
minimum wage over the past year.

   Other  operating expenses.  Other operating expenses increased $278,000,
or  19.0%,  from  $1.5  million to $1.7 million, and  as  a  percentage  of
revenues decreased from 14.6% to 14.2% due to leveraging of fixed costs.

  General and administrative expenses.  General and administrative expenses
increased  $32,000, or 3.8%, from $839,000 to $871,000, and as a percentage
of revenues decreased from 8.3% to 7.1%.

  Depreciation.  Depreciation increased $88,000, or 38.5%, from $229,000 to
$317,000,  and  as  a percentage of revenues increased from  2.3%  to  2.6%
primarily because of increased investment in property and equipment due  to
the Company's opening of new restaurants.

   Amortization.  Amortization of pre-opening costs increased  $93,000,  or
114.5%, from $81,000 to $174,000, and as a percentage of revenues increased
from  .8%  to 1.3%. The increase is primarily due to the expansion  program
begun after the initial public offering in January 1996.

  Other income.  Other income, which principally represents accounting fees
charged  to  certain  related  non-Sagebrush restaurants,  decreased  as  a
percentage of restaurant sales. These fees will continue to decrease  as  a
percentage of sales as the Company continues to open new restaurants.

   Interest  income.   The  Company had interest income  during  the  third
quarter  of  1996 as a result of temporary investment of a portion  of  the
proceeds from the Company's initial public offering which was completed  in
January 1996.

   Interest  expense.  The Company had interest expense  during  the  third
quarter  of 1997 as a result of borrowings to finance restaurant expansion.
(see Liquidity and Capital Resources below)

   Income  tax provision.  The Company's effective tax rate for  the  third
quarter of 1997 was 39.1%.

   Net  income.  Net income was $685,000 for the third quarter of 1997,  an
increase of 8.5% over net income of $631,000 for the third quarter of 1996.

Thirty-six  weeks  ended September 12, 1997 compared  to  thirty-six  weeks
ended September 6, 1996

   Revenues.   Restaurant sales increased 28.5% to $34.5  million  for  the
first  three  quarters  of  1997  as compared  to  $26.8  million  for  the
comparable  period of 1996.  The increase in sales was  the  result  of  an
increase in the number of restaurants operated offset by a .8% decrease  in
same store sales.

  Cost of restaurant sales.  Cost of restaurant sales increased $3,000,000,
or  30.7%,  from  $9.8  million to $12.8 million and  as  a  percentage  of
revenues  increased from 36.5% to 37.1%.  This increase is  due  mostly  to
higher meat prices offset somewhat by lower produce prices.

   Labor  costs.   Labor costs increased $2,314,000, or  32.1%,  from  $7.2
million  to  $9.5 million and as a percentage of revenues,  increased  from
26.9%  to  27.7%.   The  increase in dollars  and  percent  of  revenue  is
primarily  due to new restaurants, which have higher initial  labor  costs,
and changes in the minimum wage over the past year.

   Other  operating expenses.  Other operating expenses increased $853,000,
or  21.0%,  from  $4.1  million to $4.9 million, and  as  a  percentage  of
revenues  decreased  from  15.2% to 14.3% due to the  leveraging  of  fixed
costs.

  General and administrative expenses.  General and administrative expenses
increased $259,000, or 11.5%, from $2.3 million to $2.5 million, and  as  a
percentage of revenues decreased from 8.4% to 7.3%.

   Depreciation.  Depreciation increased $281,000, or 44.1%, from  $637,000
to  $918,000, and as a percentage of revenues increased from 2.4%  to  2.7%
primarily because of increased investment in property and equipment due  to
the  Company's  opening of new restaurants. All restaurants  opened  during
1997  have been built on real property purchased by the Company rather than
leased.

   Amortization.  Amortization of pre-opening costs increased $325,000,  or
165.5%,  from  $196,000  to  $521,000, and  as  a  percentage  of  revenues
increased  from .7% to 1.4%. The increase is primarily due to the expansion
program begun after the initial public offering in January 1996.

  Other income.  Other income, which principally represents accounting fees
charged to certain related non-Sagebrush restaurants, decreased slightly as
a percentage of restaurant sales.

   Interest income.  The Company had interest income during the first three
quarters  of 1996 as a result of temporary investment of a portion  of  the
proceeds from the Company's initial public offering which was completed  in
January 1996.

   Interest  expense.  The Company had interest expense  during  the  first
three  quarters  of  1997 as a result of borrowings to  finance  restaurant
expansion. (see Liquidity and Capital Resources below)

   Income  tax provision.  The Company's effective tax rate for  the  first
three  quarters  of  1997 was 39.2%.  Prior to January 1996,  most  of  the
corporations  comprising the Company were S corporations  for  federal  and
state  income  tax purposes, with taxable income allocated to  shareholders
rather  than  taxed  at the corporate level. All applicable  S  Corporation
elections  were  terminated  in  January  1996  in  connection   with   the
reorganization  effected  in connection with the Company's  initial  public
offering.

   Net  income.  Net income was $1,942,000 for the first three quarters  of
1997, an increase of 12.3% over net income of $1,729,000 for the comparable
period of 1996.


LIQUIDITY AND CAPITAL RESOURCES

  At September 12, 1997, the Company had approximately $1.7 million in cash
and  short  term  investments, $2.5 million in  long-term  debt  and  $13.7
million  in shareholders' equity. The Company's long-term debt consists  of
term  loans  with a commercial bank that are secured by certain parcels  of
real  estate owned by the Company. These loans bears interest at the bank's
prime  rate  (8.5% at September 12, 1997) and mature at various times  from
January  2007 to September 2007. At September 12, 1997, the Company  had  a
revolving  credit  facility  with  a  commercial  bank  that  provided  for
borrowings  up to $3.0 million. This facility expires on January  31,  1998
and  advances under the line of credit are unsecured, limited to short-term
working  capital purposes and bear interest at the bank's prime rate  (8.5%
at September 12, 1997). At September 12, 1997, $1.4 million was outstanding
under  the  line. The maximum amount outstanding during the year  was  $2.4
million.

  The Company primarily requires capital for the development and opening of
new  restaurants.  The  Company's substantial growth has  not  historically
required  significant additional working capital. Sales  are  predominantly
cash,  and  the  business does not require the maintenance  of  significant
receivables  or  inventories. In addition, it is common  to  receive  trade
credit on the purchase of food, beverage and supplies, thereby reducing the
need for incremental working capital to support sales increases.

  Prior to 1997, the Company established most of its restaurants by leasing
and  renovating  existing  facilities to the Sagebrush  concept.  In  1997,
however, all restaurants opened to date have been established by purchasing
land  and  building  a  new restaurant due to the increased  difficulty  of
finding  suitable buildings in desirable locations that can be  leased  and
renovated. The Company anticipates this trend will continue in the  future.
The  Company's  cost  of opening a restaurant when the Company  leases  and
renovates  an  existing building is approximately $500,000,  including  the
costs  of  renovating  the  facility, purchasing  necessary  equipment  and
training personnel. The Company's cost of building a restaurant on land the
Company  purchases  ranges  from $1.2 million to  $1.6  million,  with  the
largest  variance  related to the cost of land. Assuming that  the  Company
opens  a  total of 6 restaurants in 1997 (and that each restaurant involves
purchasing  land  and building a new facility), management expects  capital
expenditures  to  range  from  $7.0  million  to  $10.0  million.   Capital
expenditures  through  September 12, 1997 were  $5.3  million.   Management
believes  that  available cash, cash generated by operations and  available
borrowings  under the Company's $3.0 million line of credit  together  with
the  real  estate  secured borrowings described below  and other  long-term
indebtedness  will  be adequate to fund the Company's working  capital  and
capital  expenditure  requirements through  the  end  of  1997.  Management
expects to finance part of the cost of establishing new restaurants  opened
on  real  property purchased by the Company by borrowings  from  commercial
banks  secured by such real property. In the event the Company's  operating
results fall short of its projections or the borrowings described above are
insufficient  to  fund  its capital expenditure requirements,  the  Company
could  be  required to seek additional financing. For any  such  additional
financing, the Company will consider borrowings from commercial lenders and
other  sources of debt financing as well as equity financing. No  assurance
can  be  given, however, that the Company will be able to obtain  any  such
additional financing when needed upon terms satisfactory to the Company.

   The  Company currently plans to open two additional restaurants in 1997,
one  in Denver North Carolina and the other in Sanford, North Carolina.  At
September  12,  1997,  the Company had opened four restaurants  this  year,
located  in  Mount Airy, Salisbury and Lenoir, North Carolina and  Roanoke,
Virginia. The Company now operates 31 restaurants in North Carolina,  South
Carolina,  Tennessee and Virginia. Construction had started on a restaurant
in Aiken, South Carolina.

Inflation

   The impact of inflation on food, labor, equipment, land and construction
costs  could  affect the Company's operations. A majority of the  Company's
employees  are paid hourly rates related to federal and state minimum  wage
laws. In addition, most of the Company's leases require the Company to  pay
taxes,  insurance, maintenance, repairs and utility costs, and these  costs
are  subject to inflationary pressures. The Company may attempt  to  offset
the effect of inflation through periodic menu price increases, economies of
scale  in  purchasing  and  cost  controls  and  efficiencies  at  existing
restaurants.  While  the  Company  has  seen  price  increases  in  certain
categories,  management believes that inflation has had no material  impact
on costs during the third quarter of 1997, primarily because prices for the
largest  single item of expense, food costs, has risen less than 1%  during
this period.

Subsequent Events

   On September 25, 1997, Sagebrush, Inc. and WSMP, Inc. signed a letter of
intent  to  pursue  WSMP's acquisition of Sagebrush in a  stock  for  stock
merger  of  the  two  companies.  The proposed transaction  is  subject  to
various  conditions,  including the approval of Sagebrush's  directors  and
shareholders.  The proposed exchange rate is .3214 shares  of  WSMP  common
stock for each share of Sagebrush common stock.  In the event the merger is
completed, the Company's future store expansion plans may be altered.

Cautionary Statement as to Forward Looking Information

   Statements  contained  in this report as to the  Company's  outlook  for
sales, operations, capital expenditures and other amounts, budgeted amounts
and  other projections of future financial or economic performance  of  the
Company,  and  statements of the Company's plans  and  objectives  for  the
future  operations are "forward looking" statements, and are being provided
in  reliance  upon  the "safe harbor" provisions of the Private  Securities
Litigation  Reform Act of 1995. Important factors that could  cause  actual
results  or  events  to differ materially from those projected,  estimated,
assumed  or  anticipated  in any such forward looking  statements  include,
without  limitation:   the significant effect on the Company's  results  of
operations  that one or several of its restaurants could have  were  it  or
they  to  be  unsuccessful; adverse changes in economic, weather  or  other
conditions  in the relatively small geographic area in which the  Company's
restaurants  are  located; risks associated with  the  Company's  expansion
strategy,  including those associated with locating appropriate  restaurant
sites,  establishing  restaurants at those locations, hiring  and  training
sufficiently  skilled  management and other  personnel,  securing  required
governmental  approvals  and  permits, and  obtaining  adequate  financing;
increased  competition;  adverse changes in consumer  preferences  for,  or
adverse  publicity  associated with, beef; increased  food  costs;  adverse
changes  in  the availability of supplies; adverse changes in  governmental
regulation  relating to the Company's business; the loss or  suspension  of
any  of the Company's licenses or permits; the loss of the services of  any
of  the Company's key management or other personnel; and other factors that
generally  effect the Company's operations and the restaurant  industry  in
general.


Part  I  - Item 3.  Qualitative and Quantitative Disclosure About Market Risk
                    Not applicable.


Part II - Other Information


Item 6.  Exhibits and Reports on Form 8-K.

  (a) Exhibits.

      Exhibit 10.10  Note dated September 10, 1997 between Peoples Bank
                     and the Company.

      Exhibit  27    Financial Data Schedule (filed in electronic format only)

     (b)  Reports on Form 8-K.

          A report on Form 8-K was filed by the registrant on September 26,
          1997,  to  report  under  Item  5, Other  Information,  that  the
          registrant had entered into a letter of intent to pursue a merger
          with WSMP, Inc.



                                SIGNATURES
                                     
    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 thereunto duly authorized.


                                  SAGEBRUSH, INC.




Date  October  23, 1997         By:  \s\ Noland M. Mewborn
                                    Noland M. Mewborn,
                                    Vice President, Treasurer and CFO
                                    (Principal Financial Officer)