UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K/A
                                (AMENDMENT NO. 1)


[X]      ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
         EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2006

                                       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: 0-26006

                              TARRANT APPAREL GROUP
             (Exact name of registrant as specified in its charter)

           CALIFORNIA                                         95-4181026
  (State or other jurisdiction                             (I.R.S. Employer
of incorporation or organization)                       Identification Number)

                         3151 EAST WASHINGTON BOULEVARD
                          LOS ANGELES, CALIFORNIA 90023
               (Address of principal executive offices) (Zip code)

       Registrant's telephone number, including area code: (323) 780-8250

           Securities registered pursuant to Section 12(b) of the Act:

  TITLE OF EACH CLASS                  NAME OF EACH EXCHANGE ON WHICH REGISTERED
  -------------------                  -----------------------------------------
     Common Stock                                 NASDAQ Global Market


           Securities registered pursuant to Section 12(g) of the Act:

                                      NONE

         Indicate  by check  mark if the  registrant  is a  well-known  seasoned
issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

         Indicate  by check mark if the  registration  is not  required  to file
reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]

         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 [_]


<PAGE>


         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  Registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [X]

         Indicate by check mark whether the  registrant  is a large  accelerated
filer,  an  accelerated  filer or a  non-accelerated  filer.  See  definition of
"accelerated  filer and large  accelerated  filer" in Rule 12b-2 of the Exchange
Act.

  Large accelerated filer [ ]  Accelerated filer [ ]  Non-accelerated filer [X]

         Indicate by check mark whether the  registrant  is a shell  company (as
defined in Rule 12b-2 of the Act). Yes [ ] No [X]

         The aggregate  market value of the Common Stock held by  non-affiliates
of the Registrant is approximately  $34,264,994  based upon the closing price of
the Common Stock on June 30, 2006.

         Number of shares of Common Stock of the  Registrant  outstanding  as of
March 23, 2007: 30,543,763.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None

================================================================================


EXPLANATORY NOTE

This Amendment No. 1 to Form 10-K on Form 10-K/A (this  "Amendment")  amends our
Annual  Report  on Form  10-K for the  fiscal  year  ended  December  31,  2006,
originally  filed with the Securities and Exchange  Commission on March 27, 2007
(the "Original Filing"). We are filing this Amendment to include the information
required by Part III and not  included in the  Original  Filing,  as we will not
file our  definitive  proxy  statement  within 120 days of the end of our fiscal
year ended December 31, 2006.

Except as  described  above,  no other  changes  have been made to the  Original
Filing. This Amendment continues to speak as of the date of the Original Filing,
and the Company has not updated the disclosures contained therein to reflect any
events which occurred at a date subsequent to the filing of the Original Filing.
Accordingly,  this  Amendment  should be read in  conjunction  with the original
Annual Report.

As a result  of  these  amendments,  we are  also  filing  as  exhibits  to this
Amendment the  certifications  pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002. Because no financial statements are contained within this Amendment, we
are not including  certifications  pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.

In this Amendment,  unless the context indicates otherwise, the terms "Company,"
"we," "us," and "our" refer to Tarrant Apparel Group, and its subsidiaries.


<PAGE>


                                    PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

DIRECTORS AND EXECUTIVE OFFICERS

The  following  table  sets  forth the  name,  age and  position  of each of our
executive officers and directors as of April 16, 2007:

NAME                            AGE      POSITION
----                            ---      --------
Gerard Guez................      51      Chairman of the Board of Directors and
                                         Interim Chief Executive Officer
Todd Kay...................      50      Vice Chairman of the Board of Directors
Stephane Farouze...........      38      Director
Milton Koffman.............      83      Director
Simon Mani.................      55      Director
Joseph Mizrachi............      61      Director
Mitchell Simbal............      53      Director
David N. Burke.............      57      Chief Financial Officer
Henry Chu..................      69      President of Tarrant Company Limited,
                                         Registrant's Hong Kong subsidiary
Charles Ghailian...........      54      President of Tag Mex, Inc.


CLASS I DIRECTORS: TERMS EXPIRING IN 2007

STEPHANE FAROUZE                    Stephane Farouze has served as a director of
                                    the Company since May 2003.  Mr.  Farouze is
                                    currently  a Managing  Director  of Paradigm
                                    Global Advisors. Previously, from March 2000
                                    to November  2000,  Mr. Farouze was employed
                                    as   the   Global    Head   of   Sales   and
                                    Restructuring   of  Societe   General  Asset
                                    Management.  From  March  1998  to  February
                                    2000,   Mr.  Farouze  was  Head  of  Foreign
                                    Exchanges  for the  Italian  Market for BNP.
                                    Mr.  Farouze  received a Bachelor of Science
                                    in Applied  Arts and Sciences and a Business
                                    Administration  (Finance)  degree  from  San
                                    Diego State University in 1992.
                                    MEMBER:   AUDIT   COMMITTEE,    COMPENSATION
                                    COMMITTEE

MILTON KOFFMAN                      Milton  Koffman was elected as a director of
                                    the  Company in November  2001.  Since 1997,
                                    Mr.  Koffman  has been the  Chairman  of the
                                    Board for New Valu,  Inc., a multi-  faceted
                                    provider of investment  capital,  commercial
                                    loans  and  other  financial   services  for
                                    various operating  companies.  Additionally,
                                    he  is a  founder  and  director  of  Global
                                    Credit  Services,   a  leading  provider  of
                                    business   information   and   analysis  for
                                    manufacturing,  financial,  lending and real
                                    estate companies. Mr. Koffman has previously
                                    served  on the  boards  of IEC  Electronics,
                                    Jayark   Corporation,   Sattlers  Department
                                    Stores,  Walter Reed  Theaters,  Scoreboard,
                                    Inc.  and  the  Gruen  Watch  Company.   Mr.
                                    Koffman  received  a B.S.  from  Ohio  State
                                    University in 1945.
                                    MEMBER:   AUDIT   COMMITTEE,    COMPENSATION
                                    COMMITTEE


                                       1
<PAGE>


MITCHELL SIMBAL                     Mitchell  Simbal has served as a director of
                                    the Company since June 2001. Since 1997, Mr.
                                    Simbal has been  Senior  Vice  President  of
                                    Retail Operations for Caesars Entertainment,
                                    which  includes  Caesars  Palace,  Paris Las
                                    Vegas,  Bally's and Flamingo Hilton. In this
                                    position,  Mr. Simbal is  responsible  for a
                                    $100 million retail division. Mr. Simbal has
                                    a B.S. in accounting  from the University of
                                    Hartford.
                                    MEMBER:   AUDIT   COMMITTEE,    COMPENSATION
                                    COMMITTEE


CLASS II DIRECTORS: TERMS EXPIRING IN 2008

GERARD GUEZ                         Gerard Guez  founded the Company in 1988 and
                                    has  served  as our  Chairman  of the  Board
                                    since   inception  and  as  Chief  Executive
                                    Officer from inception  until 2001 and again
                                    from March 2003  through  August  2004.  Mr.
                                    Guez  was   re-appointed  as  Interim  Chief
                                    Executive Officer, effective March 31, 2006.
                                    Mr.  Guez  also  founded   Tarrant   Company
                                    Limited   ("Tarrant   HK"),  our  Hong  Kong
                                    subsidiary,  in 1985,  and he has  served as
                                    its  Chairman  since   inception  and  Chief
                                    Executive  Officer from 1985 through October
                                    2001. Prior to founding Tarrant HK, Mr. Guez
                                    served as the  President  of  Sasson  Jeans,
                                    L.A.,  Inc.,  which was a  manufacturer  and
                                    distributor   of  denim  apparel  under  the
                                    "Sasson" license.

TODD KAY                            Todd Kay has  served as our  President  from
                                    1988 to  September  1999 and from March 2000
                                    to  August  2003,  and  has  served  as Vice
                                    Chairman  since  September 7, 1999.  Mr. Kay
                                    has also served as a director of the Company
                                    since 1988 and as a  director  of Tarrant HK
                                    since 1986. Prior to joining us, Mr. Kay was
                                    a sales manager for Sasson Jeans, L.A., Inc.
                                    from 1979 to 1980 and served as President of
                                    JAG   Beverly   Hills,   Inc.,   an  apparel
                                    manufacturer, from 1980 to 1985.

JOSEPH MIZRACHI                     Joseph  Mizrachi has served as a director of
                                    the Company since June 2001. Since 1982, Mr.
                                    Mizrachi has been engaged in capital funding
                                    to finance  buyouts of small and medium size
                                    companies.  He has also been the Chairman of
                                    the Board of Midwest Properties  Management,
                                    Inc.  since  1980,  which is  engaged in the
                                    management  of  real  estate,   and  he  was
                                    formerly a member of the board of  directors
                                    of American Realty Investors Inc. (NYSE) and
                                    he was a  director  and  member  of the loan
                                    committee  of Heritage  Bank in  Washington,
                                    DC. Mr. Mizrachi  received an  undergraduate
                                    degree in Economics and Political Science in
                                    1968  and  a  Master's  degree  in  Business
                                    Administration  in Finance and  Marketing in
                                    1971,  both from the  Hebrew  University  in
                                    Jerusalem, Israel. He became a member of the
                                    American    Society   of   Chartered    Life
                                    Underwriter  (CLU) in 1973  and a  Chartered
                                    Financial Consultant (CFC) in 1982. In 1978,
                                    he  received   another  Master's  degree  in
                                    Business    Administration   and   Financial
                                    Counseling  (MFS) from The American  college
                                    in Bryn Mawr, Pennsylvania.
                                    MEMBER:   AUDIT   COMMITTEE,    COMPENSATION
                                    COMMITTEE


                                       2
<PAGE>


SIMON MANI                          Simon Mani has  served as a director  of the
                                    company since December 2004. Since 1994, Mr.
                                    Mani has served as  General  Manager of Mani
                                    Brothers  Real Estate  Investment  Group,  a
                                    privately-held  real estate  investment firm
                                    that owns, renovates, operates, manages, and
                                    leases   over  1  million   square  feet  of
                                    commercial  property.  Previously,  Mr. Mani
                                    served  as  President  of the Sara Lee Fresh
                                    division  of Sara Lee Bakery from 1992 until
                                    2001. In this  position Mr. Mani  supervised
                                    over 1,500  employees  and managed  over 500
                                    distributors.   Mr.  Mani  and  his  brother
                                    founded the  International  Baking  Company,
                                    which the Manis  sold to Sara Lee  Bakery in
                                    1992.
                                    MEMBER:   AUDIT   COMMITTEE,    COMPENSATION
                                    COMMITTEE

OTHER EXECUTIVE OFFICERS

DAVID N. BURKE                      David   Burke   has   served  as  our  Chief
                                    Financial  Officer since March 28, 2007, and
                                    served as our Vice President of Finance from
                                    May 2006 to March 2007. Prior to joining us,
                                    Mr.  Burke was a Vice  President at Citibank
                                    from 2004 to May 2006,  where he  focused on
                                    corporate    banking   for   middle   market
                                    companies in Southern California.  From 2001
                                    to 2003, he was a Vice  President  with J.P.
                                    Morgan  Chase  & Co..  Mr.  Burke  has  also
                                    previously served as Principal,  Finance and
                                    Development     for     Program     Planning
                                    Professionals,  Inc.;  Senior Vice President
                                    of The Fuji Bank,  Ltd.;  and Vice President
                                    with Bankers Trust Company. Mr. Burke earned
                                    a   bachelor's   degree  in   English   from
                                    Princeton  University  and an MBA in Finance
                                    and Accounting from the Columbia  University
                                    School of Business.

HENRY CHU                           Henry Chu has served as President of Tarrant
                                    Company  Limited,  our Hong Kong subsidiary,
                                    since  September  2001.  Mr.  Chu,  is  also
                                    currently   a  director  of  Tarrant  HK,  a
                                    position  he has held since  2002.  Prior to
                                    joining Tarrant, Mr. Chu was the founder and
                                    owner of a  garment  manufacturing  company.
                                    Mr. Chu has over 30 years of  experience  in
                                    the garment industry.

CHARLES GHAILIAN                    Charles Ghailian joined the Company in March
                                    1999 upon  acquisition  of certain assets of
                                    CMG,   Inc.,   where  he   served  as  Chief
                                    Executive  Officer  since  1988.  CMG,  Inc.
                                    designed,  produced and sold  private  label
                                    and CHAZZZ  branded  woven and knit  apparel
                                    for women,  children  and men.  He was named
                                    President of Chazzz,  a Division of Tag Mex,
                                    Inc.,  a  wholly-owned   subsidiary  of  the
                                    Company.  In April 2002,  Mr.  Ghailian  was
                                    appointed  President  of Tag  Mex,  Inc.  In
                                    addition   to   managing   the    day-to-day
                                    operations of Tag Mex,  Inc.,  Mr.  Ghailian
                                    oversees     developments    with    certain
                                    customers,  including Sears,  J.C. Penny and
                                    Mervyn's.


AUDIT COMMITTEE

The Board of Directors  has a separately  designated  standing  Audit  Committee
established in accordance  with Section  3(a)(58)(A) of the Securities  Exchange
Act of 1934. The Audit Committee currently consists of Messrs. Farouze, Koffman,
Mizrachi, Mani and Simbal, all of whom qualify as "independent" directors within
the meaning of the  applicable  rules for companies  traded on The NASDAQ Global
Market  (NASDAQ).  The Board of Directors has determined that Mitchell Simbal is
an "audit committee financial expert" as defined in Item 401(h)(2) of Regulation
S-K.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.

Section  16(a) of the  Securities  Exchange Act of 1934  requires our  executive
officers,  directors,  and persons who own more than ten percent of a registered
class of our equity  securities  to file  reports of  ownership  and  changes in
ownership  with the SEC.  Executive  officers,  directors  and  greater-than-ten
percent  shareholders  are required by SEC regulations to furnish us with copies
of all Section  16(a) forms they file.  Based solely on our review of the copies


                                       3
<PAGE>


of the forms received by us and written  representations  from certain reporting
persons  that they have  complied  with the  relevant  filing  requirements,  we
believe  that,  during the year ended  December 31, 2006,  all of our  executive
officers,  directors and greater-than-ten percent shareholders complied with all
Section 16(a) filing requirements.

CODE OF ETHICS.

We have  adopted a Code of  Ethical  Conduct  that is  applicable  to all of our
officers,  directors and employees,  including our principal  executive officer,
principal financial officer, principal accounting officer and persons performing
similar functions. A copy of our Code of Ethical Conduct was filed as an exhibit
to our Annual Report on Form 10-K.


                                       4
<PAGE>


ITEM 11.    EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

Tarrant  Apparel  Group's   compensation   program  for  senior   executives  is
administered  by the  Compensation  Committee  of our  Board of  Directors.  The
Compensation Committee is responsible for considering and making recommendations
to the Board of Directors  regarding  executive  compensation and is responsible
for administering our stock option and executive  incentive  compensation plans.
The Compensation  Committee is committed to ensure that its compensation plan is
consistent  with our company goals and objectives and the long term interests of
its shareholders.

Our named executive officers for 2006 were as follows:

         o        Gerard Guez,  Chairman of the Board and (since March 31, 2006)
                  Interim Chief Executive Officer;

         o        Barry Aved, former Chief Executive Officer (resigned as CEO as
                  of March 31, 2006);

         o        Corazon Reyes, former Chief Financial Officer (resigned as CFO
                  as of March 28, 2007);

         o        Todd Kay, Vice Chairman of the Board;

         o        Charles Ghailian,  President of our subsidiary, Tag Mex, Inc.;
                  and

         o        Henry  Chu,  President  of  our  subsidiary,  Tarrant  Company
                  Limited.

OVERVIEW OF COMPENSATION PHILOSOPHY AND OBJECTIVES

Our compensation  programs are designed to deliver a compensation  package which
is competitive  in attracting and retaining key executive  talent in the garment
industry.  Different  programs  are geared to short and longer term  performance
with the goal of  increasing  shareholder  value over the long term.  To achieve
these  objectives,  the  Compensation  Committee  has  established  an incentive
program for our executive  officers based on meeting specific revenue and margin
criteria in which long term continued improvement in pre-tax profit is the goal.
More  specifically,  the  Compensation  Committee  believes  that our  executive
compensation should encompass the following:

         o        help  attract  and retain the most  qualified  individuals  by
                  being competitive with  compensation  packages paid to persons
                  having  similar  responsibilities  and  duties  in  comparable
                  businesses;

         o        motivate and reward  individuals who help us achieve our short
                  term  and  long  term   objectives   and  thereby   contribute
                  significantly to the success of our company;

         o        relate to the value created for shareholders by being directly
                  tied  to our  financial  performance  and  condition  and  the
                  particular executive officer's contribution; and

         o        reflect   the   qualifications,    skills,   experience,   and
                  responsibilities of the particular executive officer.

The Compensation  Committee has approved a compensation  structure for the named
executive  officers,  determined on an individual basis, which incorporates four
key components:  base salary,  annual  discretionary  incentive payments,  stock
options and other benefits.

In connection with its compensation  determinations,  the Compensation Committee
seeks,  and is  significantly  influenced  by, the views of the Chief  Executive
Officer with respect to appropriate compensation levels of the other officers.

EXECUTIVE COMPENSATION COMPONENTS

For the year ended December 31, 2006, the principal  components of  compensation
for the named executive officers were:


                                       5
<PAGE>


         o        annual base salary;

         o        annual discretionary incentive compensation;

         o        stock options; and

         o        retirement and other benefits.

ANNUAL BASE SALARY

In  general,  base  salary  for each  employee,  including  the named  executive
officers,  is  established  based  on  the  individual's  job  responsibilities,
performance  and  experience;  our company's size relative to  competitors;  the
competitive environment; and a general view as to available resources.

For our Chief Executive  Officer,  the Compensation  Committee's  practice is to
review the base salary to ensure competitiveness in the market place. Currently,
our Chairman of the Board,  Gerard Guez,  is also serving as our Interim CEO. No
adjustments  to Mr.  Guez's  compensation  have been made to reflect the interim
added responsibility.  The Compensation Committee considers the base salaries of
the named  executives  to  ensure  they take  into  account  their  performance,
experience and retention value and that salary levels continue to be competitive
with companies of similar size and complexity.

ANNUAL DISCRETIONARY INCENTIVE COMPENSATION

Named  executive  officers  are  eligible to receive  discretionary  annual cash
incentive  bonuses.  We believe  that annual  incentive  compensation  should be
determined with specific reference to our overall performance and goals, as well
as the  performance  and goals of the  division  or  function  over  which  each
individual   executive  has  primary   responsibility.   In  this  regard,   the
Compensation  Committee considers both quantitative and qualitative  factors. At
this time,  the  incentive  program  has not yet been linked with a set of clear
objectives.

In 2006, the Compensation  Committee  approved incentive bonuses payable to each
of Gerard Guez and Todd Kay based upon the  Company's  achievement  of specified
pre-tax  income  thresholds  for the year.  Mr. Kay was  awarded a cash bonus of
$150,000  for 2006,  but Mr. Guez was not awarded a bonus for 2006 as the target
for his bonus was not achieved.  In 2006,  Barry Aved  received a  discretionary
cash bonus of  $100,000,  which was awarded to Mr. Aved based  primarily  on his
performance as CEO prior to his resignation in March 2006. In addition,  Charles
Ghailian received a cash bonus in 2006 of $170,000.

STOCK OPTIONS

We provide a long term  incentive  opportunity  for each of the named  executive
officers  through  awards of stock  options.  Our stock option program is a long
term plan  designed  to create a link  between  executive  compensation  and our
financial performance,  provide an opportunity for increased equity ownership by
executives, and maintain competitive levels of total compensation.

In the case of  recommended  stock option  awards,  the  Compensation  Committee
reviews  the  recommendation  of senior  management  and tests  fairness  before
approving the stock  awards.  All stock options have been granted at an exercise
price  equal to the  closing  market  price of our  common  stock on the date of
grant.  Stock options  generally vest in four equal annual  installments  over a
period of four years;  however,  options  will  immediately  vest in full upon a
change on control of the Company.  Stock  options  expire ten years from date of
grant.

In 2006, no named  executive  officers  received  stock option awards other than
Charles Ghailian and Henry Chu.

RETIREMENT BENEFITS

We  maintain  a  401(k)  plan  for  our  employees.   Named  executive  officers
participate  in  these  plans on the same  terms  as other  eligible  employees,
subject to any legal limits on the amount that may be  contributed by executives
under the plans.


                                       6
<PAGE>


We make a "matching"  contribution equal to 100% of the employee's  contribution
up to 5% of the employee's annual compensation.

OTHER BENEFITS

         o        MEDICAL  BENEFITS.  Our  employees  have  a  choice  of  three
                  coverage  options  under our  company-sponsored  group  health
                  insurance  plan.  Each  option  covers the same  services  and
                  supplies  but  differs  in the  quality of  provider  network.
                  During  2006,  we fully funded the HMO portion of the employee
                  coverage.

         o        DENTAL  BENEFITS.  We maintain a group dental plan that covers
                  preventive,   basic  and  major  services  for  employees  and
                  eligible  dependents.  During  2006,  we fully  funded the HMO
                  portion  of our  California  employee  coverage  and  the  PPO
                  coverage for our New York employee coverage.

         o        LIFE  INSURANCE.  We maintain a group life insurance plan that
                  provides for basic life and accidental death and dismemberment
                  coverage  ranging  from  $10,000 to $50,000  depending  on the
                  employee classification. We pay the premiums under this plan.

         o        VACATION.  All  employees  are eligible for vacation  based on
                  years of service.

         o        OTHER  PERQUISITES.  Vehicle  and  car  allowances  have  been
                  provided for certain  named  executives.  We do not  generally
                  provide other perquisites for other employees.

         o        PRIVATE PLANE.  From time to time our executives use a private
                  plan owned by 477 Aviation LLC, a company owned by Gerard Guez
                  for business purposes.  We reimburse Mr. Guez for the fuel and
                  related  expenses   incurred  by  477  Aviation  LLC  for  our
                  executives' business use of the aircraft. For 2006, the amount
                  of expenses reimbursed was approximately $240,000.

DEDUCTIBILITY OF COMPENSATION EXPENSES

Pursuant to Section 162(m) under the Internal Revenue Code, certain compensation
paid to executive officers in excess of $1 million is not tax deductible, except
to the  extent  such  excess  constitutes  performance-based  compensation.  The
Compensation Committee has and will continue to carefully consider the impact of
Section 162(m) when  establishing  incentive  compensation  plans and could,  in
certain circumstances,  approve and authorize compensation that is not fully tax
deductible.

ACCOUNTING AND TAX CONSIDERATIONS

We  consider  the  accounting  implications  of all  aspects  of  our  executive
compensation program. Our executive  compensation program is designed to achieve
the most favorable  accounting (and tax) treatment  possible as long as doing so
does not conflict with the intended plan design or program objectives.


                                       7
<PAGE>


REPORT OF COMPENSATION COMMITTEE

The  Compensation  Committee  of our Board of  Directors  currently  consists of
Stephane  Farouze,  Milton  Koffman,  Joseph  Mizrachi,  Simon Mani and Mitchell
Simbal.  The  Compensation  Committee is responsible  for considering and making
recommendations to the Board of Directors regarding  executive  compensation and
is  responsible  for  administering  the  Company's  stock option and  executive
incentive compensation plans.

The  Compensation  Committee  has reviewed and  discussed  with  management  the
Compensation  Discussion  and  Analysis  included in this  report.  Based on the
review and discussion with management, the Compensation Committee recommended to
the Board of Directors that the Compensation Discussion and Analysis be included
in Tarrant Apparel Group's Annual Report on Form 10-K.

         COMPENSATION COMMITTEE
         Stephane Farouze
         Milton Koffman
         Joseph Mizrachi
         Simon Mani
         Mitchell Simbal


                                       8
<PAGE>


EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following  table sets forth,  as to each person  serving as Chief  Executive
Officer  and Chief  Financial  Officer  during  2006,  and the three most highly
compensated  executive officers other than the Chief Executive Officer and Chief
Financial Officer who were serving as executive  officers at the end of the 2006
whose   compensation   exceeded  $100,000   (referred  to  as  "named  executive
officers"),  information  concerning all compensation paid for services to us in
all capacities for 2006.

<TABLE>
<CAPTION>
                                                                           OPTION      ALL OTHER
NAME AND                                        SALARY        BONUS        AWARDS     COMPENSATION         TOTAL
PRINCIPAL POSITION                   YEAR         ($)          ($)         ($)(4)        ($)(5)             ($)
---------------------------------- ---------- ------------ ------------- ----------- --------------- ------------------
<S>                                  <C>        <C>          <C>           <C>           <C>              <C>
Gerard Guez (1)                      2006        52,000         --           --            --              52,000
   Interim Chief Executive
   Officer and Chairman
---------------------------------- ---------- ------------ ------------- ----------- --------------- ------------------
Barry Aved (2)                       2006       407,692      100,000         --            --             507,692
   Former Chief Executive Officer
---------------------------------- ---------- ------------ ------------- ----------- --------------- ------------------
Corazon Reyes (3)                    2006       220,000         --           --          23,425           243,425
   Chief Financial Officer
---------------------------------- ---------- ------------ ------------- ----------- --------------- ------------------
Todd Kay                             2006       750,000      150,000         --          71,154           971,154
   Vice Chairman of the Board of
   Directors
---------------------------------- ---------- ------------ ------------- ----------- --------------- ------------------
Charles Ghailian                     2006       383,968      170,000       77,207          --             631,175
   President of Tag Mex, Inc.
---------------------------------- ---------- ------------ ------------- ----------- --------------- ------------------
Henry Chu                            2006       335,484         --         21,819        33,255           390,558
   President of Tarrant Company
   Limited
---------------------------------- ---------- ------------ ------------- ----------- --------------- ------------------
</TABLE>

(1)      Mr. Guez was appointed as Interim Chief Executive  Officer on March 31,
         2006.

(2)      Mr. Aved  resigned as Chief  Executive  Officer and  President and as a
         member of our board of directors, effective March 31, 2006.

(3)      Ms. Reyes resigned from the position of Chief Financial  Officer and as
         a member of our board of directors effective March 28, 2007.

(4)      The amounts in this column represent the dollar amounts  recognized for
         financial  statement  reporting purposes in fiscal 2006 with respect to
         stock  options  granted  in  2006 as well as  prior  fiscal  years,  in
         accordance with SFAS 123R. For additional  information on the valuation
         assumptions  with  respect  to option  grants,  including  the  options
         granted in 2006, see note 14 to the consolidated  financial  statements
         in our Annual Report on Form 10-K for the year ended December 31, 2006.
         These  amounts do not reflect the actual  value that may be realized by
         the named  executive  officers which depends on the value of our shares
         in the future.

(5)      All other compensation for 2006 consists of the following:

<TABLE>
<CAPTION>
--------------------------- ----------- ------------ ----------- ---------- ------------ -------------
                             Mr. Guez     Mr. Aved    Ms. Reyes    Mr. Kay     Mr. Chu    Mr. Ghailian
--------------------------- ----------- ------------ ----------- ---------- ------------ -------------
<S>                                  <C>          <C>     <C>       <C>               <C>      <C>
Automobile allowance/lease           -            -       7,615     71,154            -             -
--------------------------- ----------- ------------ ----------- ---------- ------------ -------------
Cash-out of unused                   -            -       4,810          -            -        31,707
vacation
--------------------------- ----------- ------------ ----------- ---------- ------------ -------------
401(k)  matching                     -            -      11,000          -            -         1,548
contribution
--------------------------- ----------- ------------ ----------- ---------- ------------ -------------
</TABLE>


                                       9
<PAGE>


GRANTS OF PLAN-BASED AWARDS IN FISCAL YEAR 2006

The following table provides  information  about  equity-awards  granted to each
named  executive  officer in 2006  under the  Tarrant  Apparel  Group 2006 Stock
Incentive Plan,  which is the only plan pursuant to which awards were granted in
2006.

<TABLE>
<CAPTION>
                                       ALL OTHER OPTION      EXERCISE OR BASE    GRANT DATE FAIR
                                      AWARDS: NUMBER OF      PRICE OF OPTION     VALUE OF OPTION
                        GRANT       SECURITIES UNDERLYING     AWARDS ($/SH)          AWARDS
NAME                     DATE            OPTIONS (#)              ((1))             ($)((2))
------------------- --------------- ----------------------- ------------------- ------------------
<S>                   <C>                  <C>                     <C>               <C>
Charles Ghailian      6/19/2006            500,000                 1.84              625,000
------------------- --------------- ----------------------- ------------------- ------------------
Henry Chu             6/19/2006            141,304                 1.84              176,630
------------------- --------------- ----------------------- ------------------- ------------------
</TABLE>

   (1) The  exercise  price of options  granted in 2006 is equal to the  closing
       price of our common  stock on the grant  date,  as reported on the NASDAQ
       Global Market.

   (2) The grant date fair value is  generally  the  amount  the  company  would
       expense in its financial  statements over the award's service period, but
       does not include a reduction for forfeitures.


                                       10
<PAGE>


OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2006

The following  table  provides  information  with respect to  outstanding  stock
options held by each of the named executive officers as of December 31, 2006.

<TABLE>
<CAPTION>
                                        NUMBER OF SECURITIES          OPTION          OPTION
                                       UNDERLYING UNEXERCISED        EXERCISE       EXPIRATION
NAME                 GRANT DATE             OPTIONS (1)              PRICE ($)         DATE
------------------- -------------- ------------------------------ -------------- ---------------
                                        (#)            (#)
                                    EXERCISABLE   UNEXERCISABLE
------------------- -------------- -------------- --------------- -------------- ---------------
<S>                  <C>              <C>          <C>                <C>          <C>
Gerard Guez          10/13/1998       666,668           --            13.50        10/13/2008
                     05/15/2002      1,000,000          --            5.50         05/15/2012
                     05/28/2003      1,000,000          --            3.65         05/28/2013
------------------- -------------- -------------- --------------- -------------- ---------------
Barry Aved           05/02/1997        2,000            --            8.50         05/02/2007
                     05/01/1998        3,000            --            15.50        05/01/2008
                     05/03/1999        2,000            --            45.50        05/03/2009
                     05/08/2000        4,000            --            8.25         05/08/2010
                     05/08/2001        4,000            --            5.55         05/08/2011
                     08/12/2003        4,000            --            2.84         08/12/2013
                     09/23/2003       100,000           --            3.65         09/23/2013
                     12/04/2003       400,000           --            3.939        12/04/2013
                     01/02/2004       30,000            --            3.68         01/02/2014
------------------- -------------- -------------- --------------- -------------- ---------------
Corazon Reyes        01/03/2000        2,000            --            9.938        01/03/2010
                     12/17/2001       30,000            --            5.09         02/17/2011
------------------- -------------- -------------- --------------- -------------- ---------------
Todd Kay             10/13/1998       333,332           --            13.50        10/13/2008
                     05/15/2002      1,000,000          --            5.50         05/15/2012
                     05/28/2003      1,000,000          --            3.65         05/28/2013
------------------- -------------- -------------- --------------- -------------- ---------------
Charles Ghailian     04/08/1999       36,000            --           39.9688       04/08/2009
                     12/15/1999       36,000            --            9.969        12/15/2009
                     12/17/2001       100,000           --            5.09         12/17/2011
                     12/30/2003       25,000            --            3.60         12/30/2013
                     06/19/2006         --         500,000 (1)        1.84         06/19/2016
------------------- -------------- -------------- --------------- -------------- ---------------
Henry Chu            10/31/2003       100,000           --            3.94         10/31/2013
                     06/19/2006         --         141,304 (2)        1.84         06/19/2016
------------------- -------------- -------------- --------------- -------------- ---------------
</TABLE>

   (1) Vests in 4 equal  installments  on each of January  1,  2007,  January 1,
       2008, January 1, 2009 and January 1, 2010.

   (2) Vests in 4 equal  installments  on each of June 19, 2007,  June 19, 2008,
       June 19, 2009 and June 19, 2010.


OPTION EXERCISES AND STOCK VESTED IN FISCAL YEAR 2006

There were no stock  option  exercises  by any of the named  executive  officers
during 2006. No stock awards vested for any named executive officer during 2006.


                                       11
<PAGE>


EMPLOYMENT   AGREEMENTS,   TERMINATION  OF  EMPLOYMENT  AND  CHANGE  OF  CONTROL
ARRANGEMENTS

EMPLOYMENT AGREEMENTS

Except  for our  agreement  Henry Chu  described  below,  we do no have  written
employment agreements with any of our other named executive officers.

We entered into an employment agreement as of September 16, 2005 with Henry Chu,
President of our Hong Kong subsidiary  Tarrant Company Limited.  This employment
agreement is for a term of three years. Mr. Chu's employment  agreement provides
for a monthly salary of HKD200,000 (or approximately  US$25,787 per month).  The
agreement  provides that either party may terminate the agreement provided a two
months advance written notice is provided to the other party. As a result, if we
were to  immediately  terminate  Mr. Chu's  employment,  we would be required to
continue to pay him two months' salary, or approximately (US) $51,574.

POTENTIAL TERMINATION AND CHANGE IN CONTROL BENEFITS

We do not have a formal plan for severance or separation  pay for our employees,
but  from  time to time we  include  a  severance  provision  in the  employment
agreements  of  our  executive  officers  that  is  triggered  in the  event  of
involuntary  termination  without  cause or in the event of a change in control.
Currently,  except  for  Henry  Chu's  employment  agreement,  none of our named
executive officers are entitled to receive severance payments upon a termination
of employment.

Our stock option plans provide that upon a change in control of the Company, all
outstanding stock options will immediately become vested and exercisable.  As of
December 31, 2006, there were no unvested stock options held the named executive
officers  that had an exercise  price lower than the closing price of our common
stock on December 29, 2006 of $1.47, as reported by NASDAQ.  As a result,  there
would  have been no value of the  accelerated  vesting  had a change in  control
occurred on December 31, 2006. Currently, there are no other benefits payable to
our named executive officers upon a change in control.


DIRECTOR COMPENSATION

The  general  policy  of  the  Board  of  Directors  is  that  compensation  for
independent directors should be a mix of cash and equity-based compensation.  We
do not pay  management  directors for Board service in addition to their regular
employee   compensation.   The  full  Board  of   Directors   has  the   primary
responsibility   for  reviewing  and   considering  any  revisions  to  director
compensation.

DIRECTOR SUMMARY COMPENSATION TABLE

The  following  table  details the total  compensation  earned by the  company's
non-employee directors in 2006.

                         FEES EARNED OR       OPTION AWARDS         TOTAL
NAME                    PAID IN CASH ($)         ($)(6)              ($)
---------------------- ------------------- ------------------- -----------------
Stephane Farouze (1)          $50,000                $618          $50,618
---------------------- ------------------- ------------------- -----------------
Milton Koffman (2)            $48,000                $618          $48,618
---------------------- ------------------- ------------------- -----------------
Simon Mani (3)                $48,000                $618          $48,618
---------------------- ------------------- ------------------- -----------------
Joseph Mizrachi (4)           $48,000                $618          $48,618
---------------------- ------------------- ------------------- -----------------
Mitchell Simbal (5)           $50,000                $618          $50,618
---------------------- ------------------- ------------------- -----------------
   Total:                    $244,000              $3,090         $247,090
---------------------- ------------------- ------------------- -----------------

   (1) As of December 31, 2006,  Mr. Farouze held options to purchase a total of
       24,000 shares.


   (2) As of December 31, 2006,  Mr. Koffman held options to purchase a total of
       28,000 shares.


   (3) As of December  31,  2006,  Mr. Mani held  options to purchase a total of
       24,000 shares.


   (4) As of December 31, 2006, Mr. Mizrachi held options to purchase a total of
       32,000 shares.


   (5) As of December 31, 2006,  Mr.  Simbal held options to purchase a total of
       28,000 shares.


   (6) The amounts in this column  represent the dollar  amounts  recognized for
       financial  statement  reporting  purposes in fiscal 2006 with  respect to
       stock  options  granted  in  2006  as  well as  prior  fiscal  years,  in
       accordance  with SFAS 123R. For  additional  information on the valuation
       assumptions with respect to option grants,  including the options granted
       in 2006,  see note 14 to the  consolidated  financial  statements  in our
       Annual  Report on Form 10-K for the year ended  December 31, 2006.  These
       amounts do not reflect the actual value that may be realized by the named
       executive  officers  which  depends  on the  value of our  shares  in the
       future.


                                       12
<PAGE>


We pay to each  non-employee  director  a monthly  cash  retainer  of $4,000 for
service as a director. We also reimburse non-employee directors for all expenses
incurred in their capacity as a member of the Board.  In addition,  the Chairman
of each Board committee receives $2,000 per year for such service.

Our current practice is to grant each non-employee director an initial option to
purchase  20,000 shares of our common stock upon joining the Board of Directors,
and,  thereafter,  to grant each non-employee an option to purchase 4,000 shares
of common  stock on the date of each  annual  meeting  at which  such  person is
reelected to serve as a director.  These options have an exercise price equal to
the fair market value of such shares on the date of grant, become exercisable so
long as the  recipient  continues  to serve as a director  in four equal  annual
installments  commencing  on the first  anniversary  of the grant  thereof,  and
expire on the tenth anniversary of the date of grant.


COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The  Compensation  Committee  of our Board of  Directors  currently  consists of
Stephane  Farouze,  Milton  Koffman,  Joseph  Mizrachi,  Simon Mani and Mitchell
Simbal.  None of these  individuals was an officer or employee of the Company at
any time during  fiscal 2006.  No current  executive  officer of the Company has
served as a member of the board of  directors or  compensation  committee of any
entity for which a member of our Board of  Directors or  Compensation  Committee
has served as an executive officer.


                                       13
<PAGE>



ITEM 12.    SECURITY  OWNERSHIP OF  CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
            RELATED STOCKHOLDER MATTERS

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of March 31, 2007, unless otherwise indicated,
certain information relating to the ownership of our common stock by (i) each of
our  directors,  (ii) each of our  named  executive  officers,  (iii) all of our
current named executive  officers and directors as a group,  and (iv) each other
shareholder  who, to our knowledge,  beneficially  owns 5% or more of our common
stock.  Except as listed  below,  there are no other  persons known to us to the
beneficial  owner of more than five  percent  of the  outstanding  shares of our
common  stock.  Except as may be  indicated  in the  footnotes  to the table and
subject to applicable  community  property  laws,  each such person has the sole
voting and  investment  power with respect to the shares  owned.  The address of
each person listed is in care of the Company,  3151 East Washington  Blvd.,  Los
Angeles, CA 90023, unless otherwise set forth below such person's name.

<TABLE>
<CAPTION>
                                                    NUMBER OF SHARES OF
                                                       COMMON STOCK
NAME AND ADDRESS                                   BENEFICIALLY OWNED (1)   PERCENT (1)
----------------                                   ----------------------   -----------
<S>                                                      <C>                   <C>
DIRECTORS AND EXECUTIVE OFFICERS:
Gerard Guez......................................        12,883,084  (2)       38.7%
Todd Kay.........................................         4,995,999  (3)       15.1%
Barry Aved (former CEO)..........................           619,000  (4)        2.0%
Corazon Reyes (former CFO).......................           284,888  (5)       *
Charles Ghailian.................................           197,000  (6)       *
Stephane Farouze.................................           100,000  (7)       *
Henry Chu .......................................           100,000  (6)       *
Milton Koffman...................................            34,000  (8)       *
Joseph Mizrachi..................................            28,000  (6)       *
Mitchell Simbal..................................            24,000  (6)       *
Simon Mani.......................................            20,000  (6)       *
David N. Burke...................................                 0             --
DIRECTORS AND OFFICERS AS A GROUP (13 PERSONS)...        19,285,971  (9)       52.5%

OTHER 5% BENEFICIAL OWNERS:
Guggenheim Capital, LLC..........................         3,500,000  (10)      10.3%
   227 West Monroe Street, Chicago, IL 60606
GMM Capital LLC..................................         1,583,700  (11)       5.2%
   1450 Broadway, 38th Floor, New York, NY 10018
</TABLE>

----------
 *     Less than one percent.
(1)    Under Rule 13d-3,  certain shares may be deemed to be beneficially  owned
       by more than one person (if, for example, persons share the power to vote
       or the power to dispose of the shares). In addition, shares are deemed to
       be beneficially  owned by a person if the person has the right to acquire
       the shares (for example,  upon  exercise of an option)  within 60 days of
       the date as of which  the  information  is  provided.  In  computing  the
       percentage  ownership of any person,  the amount of shares outstanding is
       deemed to include the amount of shares  beneficially owned by such person
       (and  only such  person)  by reason  of these  acquisition  rights.  As a
       result,  the percentage of  outstanding  shares of any person as shown in
       this table does not necessarily  reflect the person's actual ownership or
       voting  power  with  respect  to the  number of  shares  of common  stock
       actually  outstanding  at March 31, 2007.  Percentage  ownership is based
       upon 30,543,763 shares of common stock issued and outstanding as of March
       31, 2007.
(2)    Includes 2,766,668 shares of common stock issuable upon exercise of stock
       options which are or will become exercisable on or prior to May 30, 2007.
       Mr.  Guez has  pledged  an  aggregate  of  3,394,851  of such  shares  to
       financial  institutions  to secure the  repayment of loans to Mr. Guez or
       corporations controlled by Mr. Guez.


                                       14
<PAGE>


(3)    Includes 2,433,332 shares of common stock issuable upon exercise of stock
       options,  which  are or will  become  exercisable  on or prior to May 30,
       2007.  Mr. Kay has pledged an  aggregate  of  1,115,000 of such shares to
       financial  institutions  to secure the  repayment  of loans to Mr. Kay or
       corporations controlled by Mr. Kay.
(4)    Includes  559,000  shares of common stock issuable upon exercise of stock
       options,  which  are or will  become  exercisable  on or prior to May 30,
       2007.
(5)    Includes  52,000  shares of common stock  issuable upon exercise of stock
       options,  which  are or will  become  exercisable  on or prior to May 30,
       2007.
(6)    Consists  of shares of  common  stock  issuable  upon  exercise  of stock
       options,  which  are or will  become  exercisable  on or prior to May 30,
       2007.
(7)    Includes  20,000  shares of common stock  issuable upon exercise of stock
       options,  which  are or will  become  exercisable  on or prior to May 30,
       2007.
(8)    Includes  24,000  shares of common stock  issuable upon exercise of stock
       options,  which  are or will  become  exercisable  on or prior to May 30,
       2007.
(9)    Includes 6,224,000 shares of common stock issuable upon exercise of stock
       options that are or will become exercisable on or prior to May 30, 2007.
(10)   Information  taken from Schedule 13D filed with the SEC on June 27, 2006.
       Consists of shares of common stock  issuable  upon  exercise of currently
       exercisable  warrants.  Guggenheim  Capital,  LLC  exercises  power  over
       1,892,857 shares through Guggenheim Investment Management,  LLC and power
       over 1,607,143 shares through Midland Advisors Company, both of which are
       subsidiaries  of  Guggenheim  Capital,  LLC.  Of  these  shares,  Orpheus
       Holdings,  LLC is the owner of  warrants to  purchase  1,892,587  shares.
       Guggenheim Investment Management, LLC is the manager of Orpheus Holdings,
       LLC and may be  deemed to  beneficially  own such  shares.  Each of these
       persons  disclaims  membership in a group, as defined in Section 13(d)(3)
       of the Securities Exchange Act.
(11)   Information  taken from  Schedule  13G filed with the SEC on February 15,
       2007.  GMM Trust is the sole member of GMM Capital LLC and shares  voting
       and investment power with respect to the shares.

The information as to shares beneficially owned has been individually  furnished
by the respective directors, named executive officers, and other shareholders of
the Company, or taken from documents filed with the SEC.


EQUITY COMPENSATION PLAN INFORMATION

The  following  table  sets  forth  certain  information  regarding  our  equity
compensation plans as of December 31, 2006.

<TABLE>
<CAPTION>
                           NUMBER OF SECURITIES TO   WEIGHTED-AVERAGE EXERCISE       NUMBER OF SECURITIES
                           BE ISSUED UPON EXERCISE      PRICE OF OUTSTANDING        REMAINING AVAILABLE FOR
                           OF OUTSTANDING OPTIONS,     OPTIONS, WARRANTS AND     FUTURE ISSUANCE UNDER EQUITY
                             WARRANTS AND RIGHTS               RIGHTS                 COMPENSATION PLANS
                           -----------------------   -------------------------   ----------------------------
<S>                               <C>                          <C>                         <C>
Equity compensation
plans approved by
security holders......            7,673,659                    $5.52                       3,872,000
Equity compensation
plans not approved by
security holders......            1,181,732                    $4.09                          --
                           -----------------------   -------------------------   ----------------------------
Total.................                                         $5.33                       3,872,000
</TABLE>


MATERIAL  FEATURES  OF  INDIVIDUAL  EQUITY  COMPENSATION  PLANS NOT  APPROVED BY
SHAREHOLDERS

Sanders  Morris  Harris Inc.  acted as placement  agent in  connection  with our
October 2003 private placement financing  transaction.  As partial consideration
for their  services as placement  agent,  we issued to Sanders  Morris  Harris a
warrant to purchase  881,732  shares of our common stock at an exercise price of
$4.65 per share.  The warrant has a term of 5 years.  As of April 17, 2004,  the
warrant became fully vested and exercisable.


                                       15
<PAGE>


Sanders  Morris  Harris Inc.  acted as placement  agent in  connection  with our
January 2004 registered sale of 1,200,000 shares of our common stock. As partial
consideration for their services as placement agent, we issued to Sanders Morris
Harris a warrant to purchase  30,000  shares of our common  stock at an exercise
price of $3.35 per share.  The warrant is fully vested and exercisable and has a
term of five years.

T.R.  Winston & Company acted as placement agent in connection our December 2004
private  placement  financing  transaction.  As partial  consideration for their
services  as  placement  agent,  we issued  T.R.  Winston & Company a warrant to
purchase  200,000  shares our  common  stock at an  exercise  price of $2.50 per
share.  The warrant has a term of five years. The warrant will become vested and
exercisable on June 14, 2005.

Durham  Capital  Corporation  acted as our advisor in  connection  with our 2006
credit  facility  with  Guggenheim   Corporate  Funding  as  agent.  As  partial
compensation  for its  services,  we issued  Durham  Capital a warrant  which is
exercisable for 70,000 shares of our common stock. This warrant has a term of 10
years and is  exercisable  at a price of $1.88 per share,  subject to adjustment
for certain dilutive issuances.



ITEM 13.    CERTAIN   RELATIONSHIPS  AND   RELATED  TRANSACTIONS,  AND  DIRECTOR
            INDEPENDENCE

REVIEW AND APPROVAL OF RELATED PERSON TRANSACTIONS

We have adopted,  by  resolution  of our Board of  Directors,  a policy that any
transactions between us and any of our affiliates or related parties,  including
our executive officers, directors, shareholders who own 5% or more of our common
stock, the family members of those individuals and any of their affiliates, must
(1) be approved by a majority of the members of the Board of Directors  and by a
majority of the  disinterested  members of the Board of Directors  and (2) be on
terms no less  favorable to us than could be obtained  from  unaffiliated  third
parties.

REPORTABLE RELATED PERSON TRANSACTIONS

Other than the employment  arrangements  described  elsewhere in this report and
the transactions described below, since January 1, 2006, there has not been, nor
is there currently proposed,  any transaction or series of similar  transactions
to which we were or will be a party:

         o        in which the amount involved exceeds $120,000; and

         o        in which any  director,  executive  officer,  shareholder  who
                  beneficially owns 5% or more of our common stock or any member
                  of  their  immediate  family  had or  will  have a  direct  or
                  indirect material interest.

We lease our principal offices and warehouse located in Los Angeles,  California
from GET and office space in Hong Kong from Lynx International  Limited. GET and
Lynx  International  Limited are each owned by Gerard  Guez,  our  Chairman  and
Interim Chief Executive Officer, and Todd Kay, our Vice Chairman. We believe, at
the time the  leases  were  entered  into,  the rents on these  properties  were
comparable to then  prevailing  market  rents.  During the first seven months of
2006,  our Los  Angeles  offices and  warehouse  were leased on a month to month
basis. On August 1, 2006, we entered into a lease agreement with GET for the Los
Angeles  offices  and  warehouse,  which  lease has a term of five years with an
option to renew for an  additional  five year term.  On  February  1,  2007,  we
entered into a one year lease agreement with Lynx International  Limited for our
office space and warehouse in Hong Kong. We paid  $1,076,000 in 2006 in rent for
office and warehouse facilities at these locations.

On May 1, 2006,  we sublet a portion  of our  executive  office in Los  Angeles,
California  and our sales  office in New York to Seven  Licensing  Company,  LLC
("Seven  Licensing") for a monthly payment of $25,000 on a month to month basis.
Seven  Licensing is beneficially  owned by Gerard Guez. We received  $200,000 in
rental income from this sublease in the year ended December 31, 2006.

On September 1, 2006,  our  subsidiary in Hong Kong,  Tarrant  Company  Limited,
entered into an agreement with Seven  Licensing to be its buying agent to source
and purchase apparel merchandise. Total sales to Seven Licensing during the year
ended December 31, 2006 were $4.4 million.


                                       16
<PAGE>


In August  2004,  we entered  into an  Agreement  for  Purchase  of Assets  with
affiliates  of Mr. Kamel Nacif,  a shareholder  at the time of the  transaction,
which  agreement  was amended in October  2004.  Pursuant to the  agreement,  as
amended,  on November 30, 2004, we sold to the purchasers  substantially  all of
our assets and real property in Mexico,  including the equipment and  facilities
we previously leased to Mr. Nacif's affiliates in October 2003, for an aggregate
purchase price  consisting of: a) $105,400 in cash and $3,910,000 by delivery of
unsecured   promissory  notes  bearing  interest  at  5.5%  per  annum;  and  b)
$40,204,000,  by delivery of secured  promissory  notes bearing interest at 4.5%
per annum,  with  payments  due on December  31, 2005 and every year  thereafter
until December 31, 2014. The secured  promissory notes are payable in partial or
total  amounts  anytime  prior to the maturity of each note. As of September 30,
2006, the outstanding  balance of the notes and interest  receivables were $41.1
million prior to the reserve.  Historically, we have placed orders for purchases
of fabric from the purchasers pursuant to the purchase  commitment  agreement we
entered into at the time of the sale of the Mexico assets, and we have satisfied
our payment obligations for the fabric by offsetting the amounts payable against
the amounts due to us under the notes.  However,  during  2006,  the  purchasers
ceased  providing  fabric and are not currently making payments under the notes.
We further  evaluated the  recoverability of the notes receivable and recorded a
loss on the notes  receivable in the third quarter of 2006 in an amount equal to
the  outstanding  balance less the value of the underlying  assets  securing the
notes. The loss was estimated to be approximately $27.1 million,  resulting in a
notes receivable balance at September 30, 2006 of approximately $14 million.  We
believe  there  was no  significant  change  subsequently  on the  value  of the
underlying  assets  securing the notes;  therefore,  we did not have  additional
reserve in the fourth  quarter of 2006. We will  continue to pursue  payments on
the notes  receivable and believe the remaining $14 million  balance at December
31, 2006 is realizable.

Upon  consummation of the sale of our Mexico assets,  we entered into a purchase
commitment  agreement  with the  purchasers,  pursuant  to which  we  agreed  to
purchase annually over the ten-year term of the agreement,  $5 million of fabric
manufactured at our former  facilities  acquired by the purchasers at negotiated
market prices. This agreement replaced a previously existing purchase commitment
agreement with Mr. Nacif's affiliates. We did not purchase any fabric under this
agreement in 2006.  Net amount due from Mr. Kamel Nacif and his  affiliates  was
$116,000 as of December 31, 2006.

From time to time in the past, we had advanced funds to Mr. Guez. These were net
advances to Mr. Guez or payments  paid on his behalf before the enactment of the
Sarbanes-Oxley  Act in 2002.  The  promissory  note  documenting  these advances
contains a provision  that the entire amount  together with accrued  interest is
immediately  due and payable upon our written demand.  The greatest  outstanding
balance of such advances to Mr. Guez during 2006 was  approximately  $2,279,000.
At December 31, 2006, the entire balance due from Mr. Guez totaling $2.2 million
was reflected as a reduction of shareholders'  equity.  All amounts due from Mr.
Guez bore interest at the rate of 7.75% during the period.  Total  interest paid
by Mr. Guez was  $171,000 for the year ended  December  31, 2006.  Mr. Guez paid
expenses on our behalf of approximately $299,000 for the year ended December 31,
2006, which amounts were applied to reduce accrued interest and principal on Mr.
Guez's loan. These amounts  included fuel and related  expenses  incurred by 477
Aviation,  LLC,  a company  owned by Mr.  Guez,  when our  executives  used this
company's   aircraft  for  business   purposes.   Since  the  enactment  of  the
Sarbanes-Oxley Act in 2002, no further personal loans (or amendments to existing
loans) have been or will be made to officers or directors of Tarrant.

We purchased $1.1 million of fabric from Azteca Production  International,  Inc.
and its  affiliates  for the year ended  December 31,  2006.  Our total sales of
fabric and  services to Azteca  Production  International  in 2006 were  $9,000.
Azteca Production International is owned by the brothers of Gerard Guez.

We  purchased  $205,000 of trim from  Tag-It  Pacific,  Inc.  for the year ended
December 31, 2006. At December 31, 2006,  Gerard Guez and Todd Kay  beneficially
owned  488,400 and  1,003,500  shares,  respectively,  of common stock of Tag-It
Pacific, collectively representing 8.1% of Tag-It Pacific's common stock.

DIRECTOR INDEPENDENCE

A majority of our Board of Directors is  comprised  of  "independent"  directors
within the meaning of the  applicable  rules for companies  traded on the NASDAQ
Global Market.  During 2006, the Board determined that each of Stephane Farouze,
Milton  Koffman,   Simon  Mani,  Joseph  Mizrachi,   and  Mitchell  Simbal  were
independent.


                                       17
<PAGE>


ITEM 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES

The  Audit   Committee  of  our  Board  of  Directors  is  responsible  for  the
appointment,   compensation,   retention  and  oversight  of  the  work  of  the
independent  auditors.  Singer  Lewak  Greenbaum  &  Goldstein  LLP  audited our
consolidated  financial  statements for the fiscal years ended December 31, 2006
and 2005.

AUDIT FEES

Singer  Lewak  Greenbaum & Goldstein  billed us an  aggregate  of  approximately
$391,000  in fees for audit  services  associated  with the audit of our  annual
financial  statements for the fiscal year ended December 31, 2006 and the review
of our financial  statements  included in our quarterly reports on Form 10-Q for
2006. Singer Lewak Greenbaum & Goldstein billed us an aggregate of approximately
$265,000  in fees for audit  services  associated  with the audit of our  annual
financial statements for the fiscal year ended December 31, 2005. Grant Thornton
LLP (our prior principal  accountants)  billed us an aggregate of  approximately
$93,000  in fees for the  review of our  financial  statements  included  in our
quarterly reports on Form 10-Q for 2005.

AUDIT-RELATED FEES

Singer  Lewak  Greenbaum  &  Goldstein  billed  us $0 in fees for  audit-related
services  for  the  years  ended  December  31,  2006  and  2005,  respectively.
Audit-related  services  principally include assurance and related services that
are  reasonably  related  to the  performance  of the  audit  or  review  of our
financial statements and are not reported under "Audit Fees" above.

TAX FEES

Singer  Lewak  Greenbaum & Goldstein  billed us $0 for tax  services  during the
years ended  December 31, 2006 and 2005,  which would  include  services for tax
compliance, tax advice and tax planning.

ALL OTHER FEES

Singer  Lewak  Greenbaum  &  Goldstein  billed us $99,000 and $0 in fees for the
years  ended  December  31,  2006 and 2005,  respectively,  other  all  services
provided during such periods and not otherwise  described above. For 2006, these
fees were for due diligence and related  services in connection  with  financing
and acquisition activities.

All of the services described above were approved by our Audit Committee.

POLICY  ON AUDIT  COMMITTEE  PRE-APPROVAL  OF AUDIT  AND  PERMISSIBLE  NON-AUDIT
SERVICES OF INDEPENDENT AUDITORS

Consistent  with policies of the  Securities and Exchange  Commission  regarding
auditor  independence,  the Audit Committee has  responsibility  for appointing,
setting  compensation  and overseeing the work of the  independent  auditor.  In
recognition of this responsibility, the Audit Committee has established a policy
to pre-approve  all audit and  permissible  non-audit  services  provided by the
independent auditor. Our Audit Committee has considered whether the provision of
non-audit  services is compatible with maintaining the independent  accountant's
independence, and has approved any such services.


                                       18
<PAGE>


                                     PART IV

ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES

         (a)      Financial Statements and Schedule.  (Previously filed with the
                  Original Filing.)

         (b)      Exhibits.

                  31.1     Certificate of Chief  Executive  Officer  pursuant to
                           Rule 13a-14(a)  under the Securities and Exchange Act
                           of 1934, as amended.

                  31.2
                           Certificate of Chief  Financial  Officer  pursuant to
                           Rule 13a-14(a)  under the Securities and Exchange Act
                           of 1934, as amended.


                                       19
<PAGE>


                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) 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.

                                             TARRANT APPAREL GROUP

                                       By:   /S/ GERARD GUEZ
                                             ------------------------------
                                                      Gerard Guez
                                             Interim Chief Executive Officer

                                POWER OF ATTORNEY

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the dates indicated.

        SIGNATURE                         TITLE                        DATE
        ---------                         -----                        ----

     /S/ GERARD GUEZ       Chairman of the Board of Directors     April 30, 2007
------------------------   and Interim Chief Executive Officer
       Gerard Guez         (Principal Executive Officer)

  /S/ DAVID N. BURKE       Chief Financial Officer                April 30, 2007
------------------------   (Principal Financial and Accounting
     David N. Burke        Officer)

            *              Vice Chairman of the Board of          April 30, 2007
------------------------   Directors
       Todd Kay

            *              Director                               April 30, 2007
------------------------
     Milton Koffman

            *              Director                               April 30, 2007
------------------------
    Stephane Farouze

            *              Director                               April 30, 2007
------------------------
     Mitchell Simbal

            *              Director                               April 30, 2007
------------------------
     Joseph Mizrachi

            *              Director                               April 30, 2007
------------------------
       Simon Mani


* By: /S/ GERARD GUEZ
      -----------------------
Gerard Guez, Attorney-in-fact


                                      S-1