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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LS&CO.  will discuss,  and that TPI will bring forward for LS&CO.'s  evaluation,
other  potential  applications  of the Pro Fit  Technology  licensed  by TPI for
Dockers(r) products.

         4.       PRODUCT  CATEGORIES.  Exhibit  E to the  Agreement  is  hereby
amended to delete all Women's product categories, all Girl's product categories,
all  Infant's  product  categories,  all  Men's  jeans  and  all  Boy's  product
categories.  TPI is willing to  provide  LS&CO.  an  exclusive  with  respect to
certain  Women's  product  categories  if a separate  amendment to the Agreement
providing  LS&CO.  with an exclusive for such Women's product  categories can be
negotiated to TPI's and LS&CO.'s mutual  satisfaction and executed no later than
October 15, 2004.

         5.       DENIM.  Section  7(b) of the  Agreement is not affected by the
exclusivity extension provided for in Section 1 of this Extension Letter. LS&CO.
does not have exclusivity with respect to the Denim Product Categories,  whether
marketed under the Levi's(r) brand, the Dockers(r) brand or otherwise.  TPI will
continue,  subject to the terms of the  Agreement,  to supply  Products and make
Equipment  available to LS&CO. and its contractors on a non-exclusive  basis for
Dockers(r) brand garments in the Denim Product Categories on the terms contained
in Section 7(b). TPI is willing to provide  LS&CO.  an exclusive with respect to
all Denim Product Categories if a separate amendment to the Agreement  providing
LS&CO.  with an exclusive for the Denim Product  Categories can be negotiated to
TPI's and LS&CO.'s  mutual  satisfaction  and executed no later than December 7,
2004. If at any time prior to December 7, 2004, LS&CO.  decides not to pursue an
exclusive for Denim Product Categories,  LS&CO. shall promptly notify TPI of its
decision and, subject to the immediately following sentence,  TPI may supply one
or more third  parties with  Products  and/or  Equipment  for the Denim  Product
Categories.  It is  understood,  however,  that  TPI  will  not  make  waistband
components and Equipment available to be marketed in connection with the Pro-Fit
Technology  under  the  following  brands  for any  product  in any of the Denim
Product Categories in any geography through the period ending November 1, 2006:

         Lee
         Haggar
         Lands' End
         JCP Private Label

         6.       PRODUCT SOURCING.  TPI will source all Products and Additional
Program  Products  from U.S.  suppliers or other  suppliers who  manufacture  in
countries of origin such that LS&CO.'s finished goods incorporating  Products or
Additional  Program  Products  qualify  for  favorable  duty,  quota and  tariff
treatment on import into the United States under the Caribbean Basin Initiative,
the Andean Trade  Promotion and Drug  Eradication Act and the African Growth and
Opportunity Act and in compliance with the Pro-Fit License.  LS&CO.  will notify
TPI at least three months before LS&CO.  places  production of relevant garments
with contract manufacturers located in countries where LS&CO. has not previously
placed  such  production  and or where  different  trade  regulations  governing
country of origin matters apply.

         7.       PRIOR CLAIMS. As additional consideration,  each of LS&CO. and
TPI agree that it will not sue or otherwise bring  litigation  against the other
in respect of claims of any kind relating to the Agreement,  the  performance by
LS&CO.  or TPI under the  Agreement,  or  otherwise  relating to the  LS&CO./TPI
relationship  based on events,  transactions or


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communications  up to the date of this  Extension  Letter,  provided  that  this
Section 7 will not limit either party's responsibility,  if any, for payment for
Products  shipped  prior  to the date of this  Extension  Letter,  for  obsolete
inventory  repurchase  obligations or for indemnification  obligations under the
Agreement or otherwise solely with respect to third party claims.

         8.       NO  OTHER  AMENDMENTS.   It  is  understood  that,  except  as
specifically  provided,  nothing in this Extension  Letter  amends,  modifies or
limits  in any  way  any  provision  of the  Agreement  except  as  specifically
described  above,  constitutes  a waiver by either  LS&CO.  or TPI of any rights
under the Agreement or under  applicable law or limits LS&CO.'s or TPI's ability
to exercise its rights under the  Agreement or applicable  law.  This  Extension
Letter is a writing  signed by both LS&CO.  and TPI  amending  the  Agreement as
contemplated by Section 19 (e) of the Agreement.

                                   * * * * * *

       If the terms and  provisions of this  Extension  Letter are acceptable to
you,  please  indicate your  acceptance and approval by signing where  indicated
below and returning the signed copy to LS&CO.

                               Very truly yours,

                               LEVI STRAUSS & CO.

                               By:  /S/ DAVID LOVE
                                    -----------------------------------
                                    David Love
                                    Vice President, Global Product
                                    Development and Sourcing

Accepted:

TAG-IT PACIFIC, INC.

By:      /S/ COLIN DYNE
         --------------------------
         Colin Dyne
         Chief Executive Officer


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