EXTENSION AGREEMENT

                                                                 EXHIBIT 10.37.2

July 16, 2004

Mr. Colin Dyne

Chief Executive Officer

Tag-It Pacific, Inc.

21900 Burbank Blvd, Suite 270

Woodland Hills, CA 91367

Dear Colin:

         Tag-It  Pacific,  Inc.  ("TPI") and Levi Strauss & Co.  ("LS&CO.")  are

parties to an  Exclusive  Stretch  Waist Band  Component  Supply  Agreement,  as

amended at various times (as amended, the "AGREEMENT"), under which TPI supplies

to LS&CO.  and its  manufacturing  contractors  components and equipment for the

manufacture  of stretch  waist  bands.  Capitalized  terms  used in this  letter

agreement (this "EXTENSION  LETTER") and not otherwise defined have the meanings

given them in the Agreement.

         TPI and  LS&CO.  have  agreed  to  extend  and  amend  the  exclusivity

provisions of the Agreement and to address certain other matters. This Extension

Letter sets out these agreements.

         1.       EXTENSION.  As contemplated by Section 13(b) of the Agreement,

TPI and LS&CO. hereby agree to extend the exclusivity provisions of Section 7 of

the Agreement  through  November 1, 2006 with respect to all Product  Categories

(as such term is amended as provided herein) other than those Product Categories

described in Section 7(b) of the Agreement.

         2.       NON-US SUPPLY. TPI hereby agrees to supply orders, if any, for

Products (including  Additional Program Products) marketed by LS&CO.  affiliates

in Europe and Asia.  Notwithstanding  the  foregoing,  TPI and LS&CO.  recognize

that,  under the Pro-Fit  License,  TPI's right to supply Products and Equipment

for use with respect to garments  sold outside the United States may be limited,

and  TPI's  obligations  under  this  Section 2 shall not  extend  beyond  those

obligations that TPI is permitted to perform under the Pro-Fit License.

         3.       ADDITIONAL  PROGRAM  PRODUCTS.  For purposes of the Agreement,

through November 1, 2006,  "ADDITIONAL PROGRAM PRODUCTS" shall include all types

of waistband  components  purchased by LS&CO., or its manufacturing  contractors

from TPI on or before the date hereof and used by LS&CO., or its contractors, to

manufacture stretch waistbands using the Pro-Fit Technology for inclusion in (i)

all LS&CO. products into which such stretch waistbands have been incorporated on

or before the date hereof  (including,  without limiting the foregoing,  certain

Dockers(R)  brand Original  Khaki(TM) in addition to the 81 Waist Band Products,

certain  Dockers(R)  brand  denim,  and certain  Dockers(R)  brand  proStyle(TM)

including the "46" Men's product lines), and (ii) all LS&CO. products or product

lines with  different  names for the same pant segments  otherwise  described in

clause (i).  LS&CO.  agrees to continue to purchase (or cause its contractors to

purchase) Products  (including  Additional Program Products,  as defined in this

Amendment) from TPI through November 1, 2006, it being understood that LS&CO. is

not making any guarantee of Product volume  purchases.  LS&CO.  also anticipates

that TPI and

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