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  June 20, 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 July 25, 1997
Common Stock (no par value)                    5,975,000

                                     
                                     
                          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 June 20, 1997
    and January 3, 1997.                                                  3

    Consolidated Statements of Income for the twelve weeks and
    twenty-four weeks ended June 20, 1997 and June 14, 1996.              4

    Consolidated Statements of Cash Flows for the twenty-four weeks
    ended June 20, 1997 and June 14, 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 IIOther Information

    Item 4.  Submission of Matters to a Vote on Security Holders         12

    Item 6.  Exhibits                                                    12



Signatures                                                               13

                     SAGEBRUSH, INC. AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
                     June 20, 1997 and January 3, 1997

                                                  June 20,    January 3,
                                                    1997         1997
                                                (unaudited)
                                  ASSETS
Current assets:
   Cash and cash equivalents                 $  1,255,787   $  1,570,515
   Related party receivables                       22,622         24,175
   Other receivables                              183,370        250,761
   Inventories                                    583,564        495,848
   Pre-opening costs, net                         587,870        509,210
   Prepaid and other current assets                74,070         80,613
      Total current assets                      2,707,284      2,931,122

Property and equipment, net                    16,868,938     14,262,732

Other assets                                       10,510         11,293

Total assets                                 $ 19,586,732   $ 17,205,147

                   LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Note payable to bank                      $  1,593,750   $    460,000
   Current portion of long-term debt              118,328           -
   Accounts payable                             1,935,893      1,688,867
   Accrued salaries                              641,8670        283,467
   Taxes other than income                        381,180        313,010
   Other accrued liabilities                       56,723        462,807
      Total current liabilities                 4,609,414      3,208,151

Long-term debt                                  1,563,881           -

Deferred income taxes                             233,471        208,471

      Total liabilities                         6,525,093      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                            1,376,321        119,457
      Total shareholders' equity               13,061,639     13,788,525

Total liabilities and shareholders' equity   $ 19,586,732   $ 17,205,147

       See accompanying notes to consolidated financial statements.


                     SAGEBRUSH, INC. AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF CURRENT AND RETAINED EARNINGS
      Twelve Weeks ended June 20, 1997 and June 14, 1996 (Unaudited)
<TABLE>
<CAPTION>
                                                 12 Weeks Ended           24 Weeks Ended
                                            June 20,1997 June 14,1996 June 20,1997 June 14,1996
<S>                                         <C>          <C>          <C>          <C>        
REVENUES - restaurant sales                  $11,554,633  $ 8,931,698  $22,170,193  $16,764,127

OPERATING COSTS AND EXPENSES
Cost of restaurant sales                       4,288,402    3,225,383    8,245,068    6,032,177
Labor costs                                    3,211,367    2,385,697    6,057,763    4,498,435
Other operating expenses                       1,609,592    1,362,218    3,175,177    2,600,747
General and administrative expenses              817,865      752,510    1,645,426    1,418,317
Depreciation                                     300,876      210,049      601,201      408,178
Amortization (principally of pre-opening costs)  170,093       62,654      346,984      115,108
Total operating costs and expenses            10,395,195    7,998,511   20,071,619   15,072,962

OPERATING INCOME                               1,156,438      933,187    2,098,574    1,691,165

OTHER INCOME                                      13,475       23,350       37,298       42,350
INTEREST INCOME                                      301       42,171        1,083       75,266
INTEREST EXPENSE                                 (42,780)        (384)     (69,432)     (37,149)

INCOME BEFORE INCOME TAXES                     1,127,434      998,324    2,067,523    1,771,632
INCOME TAX PROVISION                            (440,925)    (379,363)    (810,659)    (673,220)

NET INCOME                                   $   686,509  $   618,961  $ 1,256,864  $ 1,098,412

NET INCOME  PER SHARE                        $      0.11  $      0.10  $      0.20  $      0.18

WEIGHTED AVERAGE SHARES
OUTSTANDING                                    6,134,821    6,300,000    6,217,411    6,275,594


RETAINED EARNINGS
   Balance at beginning of period            $   689,812  $(1,860,324)     119,457  $(1,451,587)
   Net income                                    686,509      618,961    1,256,864    1,098,412
   S corporation distribution and
      dividends paid                                -            -            -        (888,188)
   Balance at the end of period              $ 1,376,321  $(1,241,363) $ 1,376,321  $(1,241,363)
</TABLE>
                                     
       See accompanying notes to consolidated financial statements.


                     SAGEBRUSH, INC. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
      Twenty-four Weeks ended June 20, 1997 and June 14, 1996 (Unaudited)

                                                       Twenty-four Weeks Ended
                                                          June 20,    June 14,
                                                           1997        1996
Cash Flows from Operating Activities:
Net income                                            $ 1,256,864  $ 1,098,412
Adjustments to reconcile net income to net cash
  provided by operating activities:
  Depreciation                                            601,201      408,178
  Deferred tax                                             25,000         -
  Amortization (principally of pre-opening costs)         346,984      115,109
  Changes in operating assets and liabilities
    providing (using) cash
    Receivables                                            68,943      (53,032)
    Inventories                                           (87,716)      (9,416)
    Pre-opening costs                                    (425,644)    (190,750)
    Prepaid and other assets                                7,325      (74,141)
    Trade accounts payable and other accrued liabilities  267,513     (176,531)
    Total adjustments                                     803,606       19,417
      Net cash provided by operating activities         2,060,470    1,117,829

Cash Flows from Investing Activities:
  Capital expenditures                                 (3,207,407)  (2,232,481)
  Short-term investments                                     -      (1,900,000)
    Net cash used in investing activities              (3,207,407)  (2,779,533)

Cash Flows from Financing Activities:
  Proceeds from issuance of long-term debt              1,700,000         -
  Proceeds from bank debt                               1,133,750         -
  Reduction of debt                                       (17,791)  (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             832,209    3,165,794

Net increase in cash and cash equivalents                (314,728)     151,142

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

Cash and cash equivalents at end of period            $ 1,255,787  $ 2,296,951

Supplemental disclosure of cash flow information:
      Cash paid for interest                          $    69,432  $    36,765
      Cash paid for income taxes                      $   733,431  $   313,742

       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
      June  20,  1997 and for the twelve-week and twenty-four-week  periods
      ended  June  20,  1997  and  June 14, 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 June 20, 1997, and the results
      of operations for the twelve-week and twenty-four-week periods ended
      June 20, 1997 and June 14, 1996 and cash flows for the twenty-four-
      week periods ended June 20, 1997 and June 14, 1996.

Note  3:   The results of operations for the twelve-week and twenty-four-
      week periods ended June 20, 1997 and June 14, 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.

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.
<TABLE>
<CAPTION>
                                Twelve Weeks Ended Twenty-four Weeks Ended
                                                June 20,  June 14,  June 20,  June 14,
                                                  1997      1996      1997      1996
<S>                                            <C>       <C>       <C>       <C>     
Revenues - restaurant sales                      100.0%    100.0%    100.0%    100.0%
Operating costs and expenses:
  Cost of restaurant sales                        37.1      36.1      37.2      36.0
  Labor costs                                     27.8      26.7      27.3      26.8
  Other operating expenses                        13.9      15.3      14.3      15.5
  General and administrative expenses              7.1       8.4       7.4       8.5
  Depreciation                                     2.6       2.4       2.7       2.4
  Amortization (principally of pre-opening costs)  1.5        .7       1.6        .7
    Total operating costs and expenses            90.0      89.6      90.5      89.9
Operating income                                  10.0      10.4       9.5      10.1
Other income (received from related parties)        .1        .3        .1        .3
Interest income                                     .0        .5        .0        .4
Interest expense                                   (.3)      (.0)      (.3)      (.2)
Income before income taxes                         9.8      11.2       9.3      10.6
Income tax provision                              (3.9)     (4.3)     (3.6)     (4.0)
Net income                                         5.9%      6.9%      5.7%      6.6%
</TABLE>

Twelve weeks ended June 20, 1997 compared to twelve weeks ended June  14, 1996

   Revenues.   Restaurant sales increased 29.4% to $11.6  million  for  the
second  quarter of 1997 as compared to $8.9 million for the second  quarter
of  1996.  The increase in sales was primarily the result of an increase in
the number of restaurants operated at the end of the second quarter from 24
to  30  and  a .14% increase in same store sales (stores open greater  than
eighteen months during the second quarter of fiscal 1997).

  Cost of restaurant sales.  Cost of restaurant sales increased $1,063,000,
or 33.0%, from $3.2 million to $4.3 million and as a percentage of revenues
increased from 36.1% to 37.1%.  This increase is due in part to higher meat
and  dairy prices and operational changes implemented to give the Company's
customers a higher quality product.

  Labor costs.  Labor costs increased $826,000, or 34.6%, from $2.4 million
to  $3.2  million and as a percentage of revenues, increased from 26.7%  to
27.8%.  The increase in dollars and percent of revenue is primarily due  to
new restaurants, which have higher initial labor costs.

   Other  operating expenses.  Other operating expenses increased $247,000,
or  18.2%,  from  $1.4  million to $1.6 million, and  as  a  percentage  of
revenues decreased from 15.3% to 13.9% due to leveraging of fixed costs.

  General and administrative expenses.  General and administrative expenses
increased  $65,000, or 8.7%, from $753,000 to $818,000, and as a percentage
of revenues decreased from 8.4% to 7.1%.

  Depreciation.  Depreciation increased $91,000, or 43.2%, from $210,000 to
$301,000,  and  as  a percentage of revenues increased from  2.4%  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 $177,000,  or
171.5%, from $63,000 to $170,000, and as a percentage of revenues increased
from  .7%  to 1.5%. 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  second
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  second
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  second
quarter of 1997 was 39.1%.  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 $687,000 for the second quarter of 1997,  an
increase of 11% over net income of $619,000 for the second quarter of 1996.

Twenty-four weeks ended June 20, 1997 compared to twenty-four weeks ended
June 14, 1996

   Revenues.   Restaurant sales increased 32.2% to $22.2  million  for  the
first  two quarters of 1997 as compared to $16.8 million for the comparable
period  of  1996.   The increase in sales was primarily the  result  of  an
increase in the number of restaurants operated and a .61% increase in  same
store sales (stores open greater than eighteen months during the first  two
quarters of fiscal 1997).

  Cost of restaurant sales.  Cost of restaurant sales increased $2,213,000,
or 36.7%, from $6.0 million to $8.2 million and as a percentage of revenues
increased from 36.0% to 37.2%.  This increase is due in part to higher meat
and  dairy prices and operational changes implemented to give the Company's
customers a higher quality product.

   Labor  costs.   Labor costs increased $1,559,000, or  34.7%,  from  $4.5
million  to  $6.1 million and as a percentage of revenues,  increased  from
26.8%  to  27.3%.   The  increase in dollars  and  percent  of  revenue  is
primarily due to new restaurants, which have higher initial labor costs.

   Other  operating expenses.  Other operating expenses increased $574,000,
or  22.1%,  from  $2.6  million to $3.2 million, and  as  a  percentage  of
revenues decreased from 15.5% to 14.3%.

  General and administrative expenses.  General and administrative expenses
increased $227,000, or 16.0%, from $1.4 million to $1.6 million, and  as  a
percentage of revenues decreased from 8.5% to 7.4%.

   Depreciation.  Depreciation increased $193,000, or 47.3%, from  $408,000
to  $601,000, 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.

   Amortization.  Amortization of pre-opening costs increased $232,000,  or
201.4%,  from  $115,000  to  $347,000, and  as  a  percentage  of  revenues
increased  from .7% to 1.6%. 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  two
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  second
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 first two
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 $1,257,000 for the first two  quarters  of
1997,  an  increase of 14% over net income of $1,098,000 for the comparable
period of 1996.


LIQUIDITY AND CAPITAL RESOURCES

   At June 20, 1997, the Company had approximately $1.3 million in cash and
short term investments, $1.7 million in long-term debt and $13.1 million in
shareholders' equity. The Company's long-term debt consists of secured term
loans  with  a  commercial bank. These loans bears interest at  the  bank's
prime rate and the latest maturity is February 2007. At June 20, 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. At June 20, 1997, $1.6 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.  Because  most  of the Company's  restaurants  have  been
established  by converting existing restaurant facilities to the  Sagebrush
concept,  the  Company's  capital expenditures principally  have  been  for
leasehold  improvements, machinery, equipment, furniture and fixtures.  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.

   The  Company  has  historically established most of its  restaurants  by
leasing  and  renovating existing facilities to the Sagebrush concept.  The
Company  anticipates, however, that a higher proportion of new  restaurants
in  the  future  will  be acquired 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'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  8
restaurants  in  1997  (and  that five or six of such  restaurants  involve
purchasing  land  and  building  a  new  facility  and  two  or  three  are
established  by  leasing and renovating an existing  facility),  management
expects  capital expenditures to range from $9.0 million to $11.0  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 approximately eight restaurants  in
1997.  At June 20, 1997, the Company had opened three restaurants,  located
in  Mount  Airy  and Salisbury, North Carolina and Roanoke,  Virginia.  The
Company  now  operates  30 restaurants in North Carolina,  South  Carolina,
Tennessee  and  Virginia.  A  restaurant  in  Lenoir,  North  Carolina  was
scheduled  to  open in the third quarter. Construction  had  started  on  a
restaurant in Denver, North 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. Management believes that inflation has had no material  impact
on  costs  during the second quarter of 1997, primarily because prices  for
the  largest  single item of expense, food costs, has risen  less  than  1%
during this period.

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 4.   Submission of Matters to a Vote of Security Holders

     At the Annual Meeting of Shareholders of the Registrant held on May 8,
1997, the shareholders approved (i) the election of Charles F. Connor, Jr.,
L.  Dent Miller,  Barry W. Whisnant, and C. Kenneth Wilcox as Directors and
(ii)  the  selection  of  Deloitte  & Touche,  LLP  as  independent  public
accountants. The following table sets forth the votes on each matter:


                                              Against/
                                       For    Withheld   Abstain
Election of Directors
(by Nominee)

Charles F. Connor, Jr.             5,431,721               375

L. Dent Miller                     5,431,721               375

Barry C. Whisnant                  5,431,521               575

C. Kenneth Wilcox                  5,431,521               575

Approval of Selection of
Deloitte & Touche, LLP as
Independent Public Accountants     5,429,371     2,200     525




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

   (a)   Exhibits.

         Exhibit 10.9   Noted dated May 14, 1997 between Peoples Bank and
                        the Company.

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

   (b)   Reports on Form 8-K.
         None

                                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.




     July 31, 1997             \s\    Noland M. Mewborn
Date                       By: Noland M. Mewborn,
                               Vice President, Treasurer and CFO
                               (Principal Financial Officer)