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, 2005

                                       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:

                                      NONE

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

                                  COMMON STOCK

         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 [_]

         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  $51,515,376  based upon the closing price of
the Common Stock on June 30, 2005.


<PAGE>


         Number of shares of Common Stock of the  Registrant  outstanding  as of
March 30, 2006: 30,543,763.

                       DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the  Registrant's  definitive  Proxy  Statement to be filed
with the  Securities  and  Exchange  Commission  pursuant to  Regulation  14A in
connection  with the 2006 Annual Meeting of  Shareholders  are  incorporated  by
reference into Part III of this Report.


<PAGE>


                                EXPLANATORY NOTE

         We are  filing  this  Annual  Report on Form  10-K/A for the year ended
December 31, 2005 (the "Amended Annual  Report"),  to amend our Annual Report on
Form 10-K for the year ended December 31, 2005 (the "Original  Annual  Report"),
which was  originally  filed with the Securities  and Exchange  Commission  (the
"SEC") on March 31, 2006.  The Company is filing this Amended  Annual  Report in
response  to  comments  received  from the SEC.  The  following  Items amend the
Original  Annual Report,  as permitted by the rules and  regulations of the SEC.
Unless otherwise stated, all information contained in this Amended Annual Report
is as of March 31, 2006.  All  capitalized  terms used herein but not  otherwise
defined shall have the meanings ascribed to them in the Original Annual Report.


                                       1
<PAGE>


                                     PART II

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         The following  discussion and analysis should be read together with the
Consolidated  Financial  Statements  of Tarrant  Apparel Group and the "Notes to
Consolidated  Financial  Statements"  included elsewhere in this Form 10-K. This
discussion   summarizes  the  significant  factors  affecting  the  consolidated
operating results,  financial  condition and liquidity and cash flows of Tarrant
Apparel  Group for the fiscal  years ended  December  31,  2003,  2004 and 2005.
Except for historical  information,  the matters  discussed in this Management's
Discussion  and Analysis of Financial  Condition and Results of  Operations  are
forward looking  statements that involve risks and  uncertainties  and are based
upon  judgments  concerning  various  factors that are beyond our  control.  See
"Cautionary Statement Regarding  Forward-Looking  Statements" and "Item 1A. Risk
Factors."

OVERVIEW

         Tarrant  Apparel  Group is a design and  sourcing  provider  of private
label and private brand casual apparel  serving mass  merchandisers,  department
stores, branded wholesalers and specialty chains located primarily in the United
States. Our private brands include American Rag Cie, No! Jeans, Alain Weiz, Gear
7, Souvenir by Cynthia Rowley and brands associated with Jessica Simpson,  which
include "JS by Jessica  Simpson",  "Princy by Jessica Simpson" and "Sweet Kisses
by Jessica Simpson."

         We  generate  revenues  from the  sale of  apparel  merchandise  to our
customers  that we have  manufactured  by  third  party  contract  manufacturers
located  outside of the United  States.  Revenues and net income  (loss) for the
years  ended  December  31,  2003,  2004 and 2005 were as  follows  (dollars  in
thousands):

REVENUES AND NET LOSS:                  2003             2004             2005
                                     ---------        ---------        ---------
Net sales ....................       $ 320,423        $ 155,453        $ 214,648
Net income (loss) ............       $ (35,885)       $(104,677)       $     993


         Cash flows for the years ended December 31, 2003, 2004 and 2005 were as
follows (dollars in thousands):

CASH FLOWS:                                  2003          2004          2005
                                           --------      --------      --------
Net cash provided by (used in)
  operating activities ...............     $  9,935      $ 12,168      $(12,900)
Net cash provided by (used in)
  investing activities ...............     $ (1,504)     $  1,250      $  3,555
Net cash provided by (used in)
  financing activities ...............     $ (6,295)     $(15,552)     $  9,772

SIGNIFICANT DEVELOPMENTS IN 2005

PRIVATE LABEL

         Private  label  business has been our core  competency  for over twenty
years, and involves a one to one relationship with a large, centrally controlled
retailer   with  whom  we  can   develop   product   lines  that  fit  with  the
characteristics of their particular  customer.  Private label sales in 2005 were
$159.6 million compared to $133.8 million in 2004.


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<PAGE>


         The  success  of  our  private  brands   collections  has  created  new
opportunities  within the private label business to add value in the development
and marketing of new initiatives for Sears,  Mothers Work, Avenue,  Chico's, and
other retailers.  These  initiatives were launched during 2005, and are on track
to be significant growth areas for 2006.

PRIVATE BRANDS

         We launched our private brands initiative in 2003, pursuant to which we
acquire ownership of or license rights to a brand name and sell apparel products
under this brand,  generally  to a single  retail  company  within a  geographic
region.  Private  brands  sales in 2005 were  $55.0  million  compared  to $21.7
million in 2004.  At  December  31,  2005,  we owned or  licensed  rights to the
following private brands:

         o        AMERICAN  RAG CIE:  During  the  first  quarter  of  2005,  we
                  extended our agreement with Macy's Merchandising Group for six
                  years,  pursuant  to  which  we  exclusively   distribute  our
                  American Rag Cie brand through  Macy's  Merchandising  Group's
                  national  Department  Store  organization  of  more  than  500
                  stores.  Net sales of American Rag Cie branded apparel totaled
                  $21.8 million in 2005.

         o        ALAIN WEIZ: We continue to sell Alan Weiz apparel  exclusively
                  to  Dillard's  Department  Stores.  Net  sales of  Alain  Weiz
                  branded apparel totaled $5.3 million in 2005.

         o        SOUVENIR  BY  CYNTHIA  ROWLEY:  We  are  in  discussions  with
                  retailers  to identify a potential  distribution  alliance for
                  the 2006  fall or  holiday  season  for  Souvenir  by  Cynthia
                  Rowley.

         o        GEAR 7: During the fourth quarter of 2005, K-Mart discontinued
                  sales of Gear 7 products, which resulted in a decline in sales
                  for this  brand in the fourth  quarter  of 2005.  Net sales of
                  Gear 7 branded  apparel  totaled  $14.4 million in 2005. We do
                  not anticipate sales of Gear 7 branded apparel in 2006.

         o        JESSICA  SIMPSON  brands:  The JS by Jessica Simpson brand was
                  originally  launched  as a denim line with  Charming  Shoppes.
                  However,  Charming  Shoppes informed us that they would not go
                  forward  with the line,  resulting  in reduced  sales for this
                  brand  in the  fourth  quarter  of  2005.  Net  sales of JS by
                  Jessica  Simpson and Princy by Jessica  Simpson,  which is the
                  department  store and better  specialty  store brand,  totaled
                  $12.6 million in 2005. In March 2006, we became  involved in a
                  dispute with the licensor of the Jessica  Simpson  brands over
                  our continued rights to these brands.  Accordingly,  we do not
                  anticipate  sales of Jessica Simpson branded apparel after the
                  first quarter of 2006 unless and until we successfully resolve
                  our dispute with the licensor.

         o        HOUSE OF DEREON BY TINA KNOWLES:  We began  shipping  products
                  for the House of Dereon by Tina  Knowles  brand in the  fourth
                  quarter of 2005,  resulting  in net sales of $309,000 in 2005.
                  In March 2006,  we terminated  our license  agreement for this
                  brand, and sold our remaining inventory to the licensor. Prior
                  to December  31,  2005,  we had  written  off the  capitalized
                  balance  of  $1.2  million   related  to  the   agreement  and
                  recognized a loss accordingly in 2005. The loss was classified
                  as  royalty   expense  on  our   consolidated   statements  of
                  operations.

INTERNAL REVENUE SERVICE AUDIT

         In January 2004, the Internal Revenue Service completed its examination
of our Federal  income tax returns for the years ended December 31, 1996 through
2001. The IRS has proposed adjustments to


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<PAGE>


increase  our income  tax  payable  for the six years  under  examination.  This
adjustment  would  also  result  in  additional  state  taxes and  interest.  In
addition,  in July 2004,  the IRS initiated an examination of our Federal income
tax return for the year ended December 31, 2002. In March 2005, the IRS proposed
an  adjustment  to our taxable  income of  approximately  $6 million  related to
similar issues identified in their audit of the 1996 through 2001 federal income
tax returns.  The  proposed  adjustments  to our 2002 federal  income tax return
would  not  result  in  additional  tax due for  that  year  due to the tax loss
reported in the 2002 federal return.  However, it could reduce the amount of net
operating  losses available to offset taxes due from the preceding tax years. We
believe that we have  meritorious  defenses to and intend to vigorously  contest
the proposed  adjustments  made to our federal  income tax returns for the years
ended 1996 through  2002.  If the proposed  adjustments  are upheld  through the
administrative  and legal  process,  they could  have a  material  impact on our
earnings and cash flow.  We believe we have provided  adequate  reserves for any
reasonably  foreseeable  outcome  related to these  matters on the  consolidated
balance  sheets  included in the  Consolidated  Financial  Statements  under the
caption  "Income  Taxes".  The  maximum  amount of loss in excess of the  amount
accrued in the financial  statements is $7.7 million. We do not believe that the
adjustments,  if any,  arising  from  the IRS  examination,  will  result  in an
additional  income tax  liability  beyond what is  recorded in the  accompanying
consolidated balance sheets.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

         Management's  discussion  and analysis of our  financial  condition and
results of  operations  are based upon our  consolidated  financial  statements,
which have been  prepared in accordance  with  accounting  principles  generally
accepted in the United States of America.  The  preparation  of these  financial
statements  requires us to make estimates and judgments that affect the reported
amounts of assets,  liabilities,  revenues and expenses, and related disclosures
of contingent assets and liabilities.  We are required to make assumptions about
matters,  which are  highly  uncertain  at the time of the  estimate.  Different
estimates we could  reasonably  have used or changes in the  estimates  that are
reasonably  likely  to occur  could  have a  material  effect  on our  financial
condition or result of operations. Estimates and assumptions about future events
and their effects cannot be determined with  certainty.  On an ongoing basis, we
evaluate estimates,  including those related to returns,  discounts,  bad debts,
inventories,  intangible assets, income taxes, and contingencies and litigation.
We base our  estimates  on  historical  experience  and on  various  assumptions
believed  to  be  applicable  and  reasonable  under  the  circumstances.  These
estimates may change as new events occur, as additional  information is obtained
and  as  our  operating   environment   changes.  In  addition,   management  is
periodically faced with uncertainties,  the outcomes of which are not within its
control and will not be known for prolonged period of time.

         Management  believes  our  financial  statements  are fairly  stated in
accordance with accounting principles generally accepted in the United States of
America and provide a meaningful  presentation  of our  financial  condition and
results of operations.

         We believe the following critical  accounting  policies affect our more
significant  judgments and estimates used in the preparation of our consolidated
financial  statements.  For a further discussion on the application of these and
other accounting  policies,  see Note 1 of the "Notes to Consolidated  Financial
Statements."

ACCOUNTS RECEIVABLE--ALLOWANCE FOR RETURNS, DISCOUNTS AND BAD DEBTS

         We evaluate the  collectibility of accounts  receivable and chargebacks
(disputes  from  the  customer)   based  upon  a  combination  of  factors.   In
circumstances where we are aware of a specific customer's  inability to meet its
financial  obligations (such as in the case of bankruptcy filings or substantial
downgrading  of  credit  sources),  a  specific  reserve  for bad debts is taken
against  amounts  due to reduce  the net  recognized  receivable  to the  amount
reasonably expected to be collected. For all other


                                       4
<PAGE>


customers,  we  recognize  reserves for bad debts and  chargebacks  based on our
historical collection  experience.  If collection  experience  deteriorates (for
example,  due to an unexpected  material  adverse  change in a major  customer's
ability  to  meet  its  financial  obligations  to  us),  the  estimates  of the
recoverability of amounts due us could be reduced by a material amount.

         As of December  31,  2005,  the balance in the  allowance  for returns,
discounts and bad debts  reserves was $3.0 million,  compared to $2.4 million at
December 31, 2004.

INVENTORY

         Our  inventories  are  valued  at the  lower of cost or  market.  Under
certain  market  conditions,  we  use  estimates  and  judgments  regarding  the
valuation of inventory to properly value  inventory.  Inventory  adjustments are
made for the  difference  between the cost of the  inventory  and the  estimated
market  value and  charged to  operations  in the period in which the facts that
give rise to the adjustments become known.

VALUATION OF LONG-LIVED AND INTANGIBLE ASSETS AND GOODWILL

         We assess the impairment of identifiable intangibles, long-lived assets
and  goodwill  whenever  events or changes in  circumstances  indicate  that the
carrying value may not be recoverable.  Factors considered  important that could
trigger an impairment review include, but are not limited to, the following:

         o        a significant underperformance relative to expected historical
                  or projected future operating results;

         o        a significant  change in the manner of the use of the acquired
                  asset or the strategy for the overall business; or

         o        a significant negative industry or economic trend.

         Effective January 1, 2002, we adopted Statement of Financial Accounting
Standards No. 142,  "Goodwill and Other  Intangible  Assets."  According to this
statement,  goodwill and other  intangible  assets with indefinite  lives are no
longer subject to  amortization,  but rather an annual  assessment of impairment
applied on a fair-value-based test.

         We utilized  the  discounted  cash flow  methodology  to estimate  fair
value. At December 31, 2005, we have a goodwill  balance of $8.6 million,  and a
net property and equipment  balance of $1.7  million,  as compared to a goodwill
balance of $8.6 million and a net property and equipment balance of $1.9 million
at December 31, 2004.  Our net  property and  equipment  balance at December 31,
2004  reflects the disposal of our Mexico fixed assets of $123.3  million in the
fourth  quarter of 2004.  During the year ended  December 31,  2005,  we did not
recognize any impairment related to goodwill and property and equipment.

         We assess the carrying  value of long-lived  assets in accordance  with
SFAS No. 144,  "Accounting for the Impairment or Disposal of Long-Lived Assets."
In 2004, we evaluated the  long-lived  assets in Mexico for  recoverability  and
concluded that the book value of the asset group was  significantly  higher than
the expected future cash flows and that impairment had occurred. Accordingly, we
recognized a non-cash impairment loss of approximately $78 million in the second
quarter of 2004. The impairment  charge was the difference  between the carrying
value and fair value of the impaired assets. Our determination of fair value was
determined  based  on  independent  appraisals  of the  property  and  equipment
obtained in June 2004.


                                       5
<PAGE>


FOREIGN CURRENCY TRANSLATION

         Assets and  liabilities  of our Mexico and Hong Kong  subsidiaries  are
translated at the rate of exchange in effect on the balance  sheet date;  income
and expenses are translated at the average rates of exchange  prevailing  during
the respective periods. The functional currency in which we transact business in
Hong Kong is the Hong Kong dollar and in Mexico is the peso.

         Foreign  currency gains and losses resulting from translation of assets
and liabilities are included in other comprehensive  income (loss).  Transaction
gains or  losses,  other than  inter-company  debt  deemed to be of a  long-term
nature, are included in net income (loss) in the period in which they occur.

REVENUE RECOGNITION

         Revenue is recognized at the point of shipment for all merchandise sold
based on FOB shipping point. For merchandise shipped on landed duty paid ("LDP")
terms,  revenue is recognized at the point of either leaving  Customs for direct
shipments or at the point of leaving our warehouse  where title is  transferred,
net of an estimate of returned merchandise and discounts.  Customers are allowed
the rights of return or non-acceptance  only upon receipt of damaged products or
goods with quality  different  from  shipment  samples.  We do not undertake any
after-sale warranty or any form of price protection.

         We often  arrange,  on behalf of  manufacturers,  for the  purchase  of
fabric  from a single  supplier.  We have the  fabric  shipped  directly  to the
cutting factory and invoice the factory for the fabric. Generally, the factories
pay us for the fabric with offsets against the price of the finished goods.

INCOME TAXES

         As  part  of  the  process  of  preparing  our  consolidated  financial
statements,  management  is  required to  estimate  income  taxes in each of the
jurisdictions  in which we  operate.  The  process  involves  estimating  actual
current tax expense along with assessing  temporary  differences  resulting from
differing treatment of items for book and tax purposes. These timing differences
result in  deferred  tax  assets  and  liabilities,  which are  included  in our
consolidated balance sheets.  Management records a valuation allowance to reduce
its  deferred  tax  assets  to the  amount  that is more  likely  than not to be
realized.  Management  has  considered  future  taxable  income and  ongoing tax
planning strategies in assessing the need for the valuation allowance. Increases
in the valuation  allowance result in additional  expense to be reflected within
the tax provision in the consolidated statement of operations.

         In addition,  accruals are also estimated for ongoing audits  regarding
U.S. Federal tax issues that are currently unresolved,  based on our estimate of
whether,  and the extent to which,  additional  taxes will be due. We  routinely
monitor the potential  impact of these  situations  and believe that amounts are
properly  accrued for. If we ultimately  determine that payment of these amounts
is unnecessary, we will reverse the liability and recognize a tax benefit during
the period in which we determine that the liability is no longer  necessary.  We
will record an  additional  charge in our  provision  for taxes in any period we
determine  that the original  estimate of a tax liability is less than we expect
the  ultimate  assessment  to be.  See  Note 10 of the  "Notes  to  Consolidated
Financial Statements" for a discussion of current tax matters.

DEBT COVENANTS

         Our debt agreements require certain covenants including a minimum level
of net worth as  discussed  in Note 8 of the  "Notes to  Consolidated  Financial
Statements."  If our results of  operations  erode and we are not able to obtain
waivers  from the  lenders,  the debt would be in default  and  callable  by our
lenders.  In addition,  due to cross-default  provisions in our debt agreements,
substantially all of our


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<PAGE>


long-term  debt would  become due in full if any of the debt is in  default.  In
anticipation of us not being able to meet the required  covenants due to various
reasons, we either negotiate for changes in the relative covenants or an advance
waiver or  reclassify  the  relevant  debt as current.  We also believe that our
lenders would provide waivers if necessary.  However, our expectations of future
operating  results and continued  compliance with other debt covenants cannot be
assured and our lenders'  actions are not  controllable by us. If projections of
future operating results are not achieved and the debt is placed in default,  we
would be required to reduce our expenses,  including by  curtailing  operations,
and to  raise  capital  through  the  sale of  assets,  issuance  of  equity  or
otherwise,  any of which could have a material  adverse  effect on our financial
condition and results of operations.

NEW ACCOUNTING PRONOUNCEMENTS

         For a description  of recent  accounting  pronouncements  including the
respective  expected  dates of adoption and effects on results of operations and
financial  condition,  see  Note  1 of  the  "Notes  to  Consolidated  Financial
Statements."

RESULTS OF OPERATIONS

         The  following  table sets forth,  for the periods  indicated,  certain
items in our consolidated statements of income as a percentage of net sales:

<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                        ----------------------------------------
                                                           2003           2004           2005
                                                        ----------     ----------     ----------
<S>                                                        <C>            <C>            <C>
Net sales ...........................................      100.0 %        100.0 %        100.0 %
Cost of sales .......................................         90.0           86.5           79.1
                                                        ----------     ----------     ----------
Gross profit ........................................         10.0           13.5           20.9
Selling and distribution expenses ...................          3.5            6.0            5.0
General and administration expenses .................          9.9           20.6           12.5
Royalty Expenses ....................................          0.1            0.4            1.7
Impairment charges ..................................          7.0           50.2           --
Cumulative translation loss .........................         --             14.7           --
                                                        ----------     ----------     ----------

Income (loss) from operations .......................        (10.5)         (78.4)           1.7
Interest expense ....................................         (1.7)          (1.8)          (2.2)
Interest income .....................................          0.1            0.2            1.0
Minority interest ...................................          1.0            9.9            0.0
Interest in income of equity method investee ........          0.0            0.5            0.3
Other income ........................................          1.5            4.1            0.1
Other expense .......................................         (0.3)          (0.3)          (0.0)
                                                        ----------     ----------     ----------

Income (loss) before provision for income taxes .....         (9.9)         (65.8)           0.9
Provision for income taxes ..........................         (1.3)          (1.5)          (0.4)
                                                        ----------     ----------     ----------

Net Income (loss) ...................................        (11.2)%        (67.3)%          0.5%
                                                        ==========     ==========     ==========
</TABLE>

COMPARISON OF 2005 TO 2004

         Net sales increased by $59.2 million,  or 38.1%, from $155.5 million in
2004 to $214.6  million in 2005.  The increase in net sales was primarily due to
increased sales of private brands, which was $55.0


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<PAGE>


million in 2005 compared to $21.7 million in 2004. Gear 7, JS by Jessica Simpson
and Princy by Jessica Simpson recorded  significant sales contributions in 2005,
as compared to sales of $1.2 million for these  brands in 2004.  We expect sales
of these brands to decline  significantly in 2006 due to the  discontinuance  of
the Gear 7 line by K-Mart,  the dispute over our continued rights to the Jessica
Simpson line and the discontinuation of House of Dereon.  Private label sales in
2005 were $159.6 million  compared to $133.8 million in 2004,  with the increase
resulting primarily from increased sales in 2005 to Wal-Mart,  Chico's,  Mothers
Work and Macy's Merchandising Group.

         Gross profit  consists of net sales less product  costs,  direct labor,
manufacturing overhead, duty, quota, freight in, and brokerage. Gross profit for
2005 was $44.9 million,  or 20.9% of net sales,  compared to $21.0  million,  or
13.5 % of net sales,  for 2004,  representing  an increase  of $23.9  million or
114.1%.  The increase in gross profit for 2005 occurred  primarily because of an
increase in sales volume and gross margin.  The  improvement  in gross margin is
primarily  attributable  to the change of  relative  product mix in favor of the
higher margin  private  brands  business as compared to private label as well as
improved  margins in the private label business due to expansion of our business
to include more  knitwear and woven tops at better  margins  using private brand
product developments.

         Selling and distribution  expenses increased by $1.4 million, or 15.5%,
from $9.3  million in 2004 to $10.7  million  in 2005.  As a  percentage  of net
sales,  these variable expenses  decreased from 6.0% in 2004 to 5.0% in 2005 due
to the significant increase in sales volume during 2005.

         General and  administrative  expenses  decreased  by $5.2  million,  or
16.3%,  from $32.1  million in 2004 to $26.9  million in 2005.  The decrease was
primarily due to the  depreciation and amortization of our Mexico assets of $6.8
million and $1.1  million of  severance  paid to the Mexican  workers in 2004 as
compared to no such  expense in 2005 after  disposition  of our fixed  assets in
Mexico in late 2004. As a percentage of net sales, these expenses decreased from
20.6% in 2004 to 12.5% in 2005.

         Royalty and marketing  allowance expenses increased by $3.1 million, or
505.8%,  to $3.7  million  in 2005  from  $605,000  in 2004.  The  increase  was
primarily  due to  increased  sales  under the  licensed  Alain Weiz and Jessica
Simpson  brands and a  write-off  of the  remaining  balance of $1.2  million of
prepaid  royalty  on House of Dereon in 2005 as a result of  termination  of our
agreement  to design,  market and sell House of Dereon by Tina  Knowles  branded
apparel  in March  2006.  See Note 11 of the  "Notes to  Consolidated  Financial
Statements." As a percentage of net sales,  these expenses  increased to 1.7% in
2005 from 0.4% in 2004.

         Impairment  charges were $78.0 million in 2004 or (50.2)% of net sales,
compared to no such expense in 2005.  The expense in 2004 was the  impairment of
long-lived  assets of our  Mexico  operations  due to our  decision  to sell the
manufacturing  operations  in  Mexico.  See Note 5 and Note 7 of the  "Notes  to
Consolidated Financial Statements."

         Cumulative   translation   loss   attributable  to  liquidated   Mexico
operations  was $22.8 million in 2004,  or (14.7)% of net sales,  compared to no
such expense in 2005.  We incurred this charge upon the sale of our fixed assets
in Mexico in the fourth quarter of 2004.

         Income from  operations was $3.6 million in 2005, or 1.7% of net sales,
compared to loss from  operation  of $121.8  million in 2004,  or (78.4)% of net
sales, due to the factors described above.

         Interest expense increased by $1.7 million, or 61.9%, from $2.9 million
in 2004 to $4.6  million in 2005.  As a  percentage  of net sales,  this expense
increased to 2.2% in 2005 from 1.8% in 2004.  The increase was  primarily due to
an interest  expense of $1.3  million in 2005  related to  interest  payments to
holders of convertible debentures and amortization of debt discount arising from
issuing convertible


                                       8
<PAGE>


debentures,  compared to no such expense in 2004.  Interest income  increased by
$1.7  million,  or 451.3%  from  $378,000 in 2004 to $2.1  million in 2005.  The
increase  was  primarily  due to the interest  earned from the notes  receivable
related  to the sale of our fixed  assets in  Mexico  of $1.9  million  in 2005,
compared to no such income in 2004. Other income  decreased by $6.0 million,  or
94.4%,  from $6.4  million in 2004 to $354,000 in 2005,  due  primarily  to $5.5
million of lease income  received for the lease of our  facilities and equipment
in Mexico  in 2004,  compared  to no such  income in 2005 due to the sale of our
Mexico operations in the fourth quarter of 2004. Other expenses were $529,000 in
2004 compared to $1,000 in 2005.

         In 2005,  we allocated  $75,000 of profit to minority  interest,  which
consisted of profit  shared with the  minority  partner in the PBG7,  LLC.  Loss
allocated to minority interests in 2004 was $15.3 million, representing $471,000
attributed to the minority shareholder in United Apparel Ventures,  LLC, for its
49.9% share in the loss and $14.8 million attributed to the minority shareholder
in Tarrant Mexico for its 25% share in the loss.

         Income  before  provision for income taxes was $1.9 million in 2005 and
loss before provision for income taxes was $102.3 million in 2004,  representing
0.9% and  (65.8)% of net sales,  respectively.  The  increase  in income  before
provision for income taxes was due to the factors discussed above.

         Provision  for  income  taxes was  $927,000  in 2005  compared  to $2.3
million in 2004, representing (0.4)% and (1.5)% of net sales, respectively.

         Net income was $1.0  million in 2005 as  compared to net loss of $104.7
million in 2004,  representing  0.5% and  (67.3)%  of net  sales,  respectively.
Included in the $104.7  million loss in 2004 were  charges of $78.0  million for
the impairment of long-lived assets and $22.8 million of cumulative  translation
loss attributable to liquidated Mexico operations. There were no such charges in
2005.

COMPARISON OF 2004 TO 2003

         Net sales decreased by $165.0 million, or 51.5%, from $320.4 million in
2003  to  $155.5  million  in  2004.  The  decrease  in net  sales  was  largely
attributable  to a decrease in Mexican sourced sales from $139.1 million in 2003
to $19.5 million in 2004.  Several of our larger  customers for Mexico  produced
jeans wear refused to place orders with us following  the  restructuring  of our
Mexico  operations  and resulting  labor unrest in Mexico,  which  resulted in a
decline in revenue of  approximately  $75 million from sales of  Mexico-produced
merchandise  during  2004  as  compared  to  2003.  Additionally,   in  2004  we
experienced  a  decline  in  sales  to  certain   customers  of   Mexico-sourced
merchandise that was unrelated to the labor unrest. In 2004, we also experienced
a reduction of sales of fabric to Mexican  manufacturers  of  approximately  $17
million.  We also experienced a reduction of sales from our import operations in
the Far East of approximately $40 million,  due in part to several of our larger
customers reducing their back-to-school and holiday order placements.

         Gross  profit  for  2004 was  $21.0  million,  or  13.5% of net  sales,
compared to $32.0  million,  or 10.0 % of net sales,  for 2003,  representing  a
decrease of $11.0  million or 34.5%.  The  decrease in gross profit for 2004 was
primarily  due to the  substantial  decrease  in sales  volume.  The lower gross
profit,  especially  in the fourth  quarter,  was primarily due to unplanned air
freight costs and higher quota costs in some categories  coupled with additional
inventory  markdowns.  The increase in gross profit as a percentage of net sales
for 2004 when compared to 2003 was primarily because of an inventory  write-down
of $11 million and severance  payments to Mexican workers of approximately  $2.5
million  included  in cost  of  goods  sold in  2003.  Excluding  the  inventory
write-down and severance  payments in 2003,  gross profit as a percentage of net
sales for 2003 was 14.2% compared to 13.5% for 2004.


                                       9
<PAGE>


         Selling and distribution  expenses  decreased by $2.0 million,  or 18%,
from $11.3  million  in 2003 to $9.3  million in 2004.  As a  percentage  of net
sales,  these variable expenses  increased from 3.5% in 2003 to 6.0% in 2004 due
to the significant decline in sales during 2004.

         General and  administrative  expenses  increased by $317,000,  or 1.0%,
from $31.8  million in 2003 to $32.1  million in 2004.  As a  percentage  of net
sales,  these  expenses  increased  from  9.9% in 2003 to  20.6%  in 2004 due to
significant decline in sales during 2004. This increase was partly caused by the
reclassification  of $3.2 million of depreciation of our Mexican facilities from
cost of goods sold in the fourth  quarter of 2003,  compared to $6.8  million of
depreciation and $1.1 million of severance payments to Mexican workers in 2004.

         Royalty and  marketing  allowance  expenses  increased by $363,000,  or
149.5%, to $605,000 in 2004 from $242,000 in 2003. As a percentage of net sales,
these expenses increased to 0.4% in 2004 from 0.1% in 2003.

         Impairment  charges were $78.0 million in 2004 or (50.2)% of net sales,
compared  to $22.3  million in 2003 or (7.0)% of net sales.  The expense in 2004
was the  impairment of  long-lived  assets of our Mexico  operations  due to our
decision to sell the  manufacturing  operations  in Mexico.  The expense in 2003
included $19.5 million of the  impairment of our goodwill and intangible  assets
and $2.8 million of  write-off of prepaid  expenses due to our decision to cease
directly  operating a substantial  majority of our equipment and fixed assets in
Mexico  commencing  in the third  quarter of 2003.  See Note 5 and Note 7 of the
"Notes to Consolidated Financial Statements."

         Cumulative   translation   loss   attributable  to  liquidated   Mexico
operations  was $22.8 million in 2004,  or (14.7)% of net sales,  compared to no
such expense in 2003. As discussed  above, we incurred this charge upon the sale
of our fixed assets in Mexico in the fourth quarter of 2004.

         Loss from  operations  was $121.8  million  in 2004,  or (78.4)% of net
sales,  compared to $33.6 million in 2003,  or (10.5)% of net sales,  due to the
factors described above.

         Interest expense decreased by $2.7 million, or 49.0%, from $5.6 million
in 2003 to $2.9 million in 2004. This decrease in interest  expense was a result
of a decrease of the amount we financed under our main credit  facility in 2004.
Interest income was $378,000 in 2004 compared to $425,000 in 2003.  Other income
increased by $1.6 million,  or 33.1%,  from $4.8 million in 2003 to $6.4 million
in 2004,  due to $3.7 million of lease income  received for our  facilities  and
equipment in Mexico in 2003,  compared to $5.5 million in 2004.  Other  expenses
decreased from $1.2 million in 2003 to $529,000 in 2004.

         Loss  allocated  to  minority  interests  in 2004  was  $15.3  million,
representing  $471,000 attributed to the minority  shareholder in United Apparel
Ventures,  LLC, for its 49.9% share in the loss and $14.8 million  attributed to
the minority  shareholder in Tarrant Mexico for its 25% share in the loss.  Loss
allocated  to minority  interests  in 2003 was $3.5  million,  representing  the
minority  partner's  share of  profit  in UAV of $3.5  million,  offset  by $7.0
million  attributed to the minority  shareholder  in Tarrant  Mexico for its 25%
share in the loss including $4.4 million for its share in the special write-down
on goodwill and inventory of Tarrant Mexico.

         Loss before  provision for income taxes was $102.3  million in 2004 and
$31.8  million  in  2003,   representing   (65.8)%  and  (9.9)%  of  net  sales,
respectively.  The increase in loss before provision for income taxes was due to
the factors discussed above.

         Provision for income taxes was $2.3 million in 2004 versus $4.1 million
in 2003, representing (1.5)% and (1.3)% of net sales, respectively.


                                       10
<PAGE>


         Loss after taxes and cumulative  effect of accounting change was $104.7
million in 2004 and $35.9 million in 2003,  representing  (67.3)% and (11.2)% of
net  sales,  respectively.  Included  in the  $104.7  million  loss in 2004 were
charges of $78.0  million  for the  impairment  of  long-lived  assets and $22.8
million  of  cumulative  translation  loss  attributable  to  liquidated  Mexico
operations.  Included in the $35.9 million loss in 2003 were non-cash charges of
$22.3 million for the  impairment  of assets and an inventory  write-down of $11
million.

QUARTERLY RESULTS OF OPERATIONS

         The  following  table sets forth,  for the periods  indicated,  certain
items in our  consolidated  statements of income in millions of dollars and as a
percentage of net sales:

<TABLE>
<CAPTION>
                                                         QUARTER ENDED

                    MAR. 31    JUN. 30    SEP. 30    DEC. 31    MAR. 31    JUN. 30   SEP. 30   DEC. 31
                     2004       2004       2004       2004       2005       2005      2005      2005
                    -------    -------    -------    -------    -------    -------   -------   -------
<S>                 <C>        <C>        <C>        <C>        <C>        <C>       <C>       <C>
Net Sales .......   $  42.2    $  38.5    $  38.1    $  36.7    $  44.8    $  50.5   $  69.6   $  49.7
Gross profit ....       7.5        5.3        4.1        4.1        8.9       11.5      14.5      10.0
Operating income
 (loss) .........      (6.0)     (84.6)      (3.6)     (27.6)       0.2        1.5       3.0      (1.1)
Net income (loss)      (3.0)     (68.6)      (4.0)     (29.1)      (0.1)       0.9       1.7      (1.5)
</TABLE>

<TABLE>
<CAPTION>
                                                            QUARTER ENDED

                    MAR. 31     JUN. 30     SEP. 30     DEC. 31     MAR. 31     JUN. 30    SEP. 30    DEC. 31
                     2004        2004        2004        2004        2005        2005       2005       2005
                    -------     -------     -------     -------     -------     -------    -------    -------
<S>                   <C>         <C>         <C>         <C>         <C>         <C>        <C>        <C>
Net sales .......     100.0%      100.0%      100.0%      100.0%      100.0%      100.0%     100.0%     100.0%
Gross profit ....      17.8        13.7        10.9        11.1        20.0        22.7       20.9       20.0
Operating income
 (loss) .........     (14.1)     (219.8)       (9.5)      (75.2)        0.5         2.8        4.3       (2.1)
Net income (loss)      (7.1)     (178.1)      (10.5)      (79.3)       (0.2)        1.7        2.5       (3.0)
</TABLE>

         As is typical  for us,  quarterly  net sales  fluctuated  significantly
because our customers  typically  place bulk orders with us, and a change in the
number of orders shipped in any one period may have a material effect on the net
sales for that period.


                                       11
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

         Our  liquidity  requirements  arise  from the  funding  of our  working
capital  needs,  principally  inventory,  finished  goods  shipments-in-transit,
work-in-process and accounts receivable, including receivables from our contract
manufacturers  that  relate  primarily  to fabric we  purchase  for use by those
manufacturers.  Our primary sources for working capital and capital expenditures
are cash  flow from  operations,  borrowings  under  our bank and  other  credit
facilities, issuance of long-term debt, sales of equity and debt securities, and
vendor financing. In the near term, we expect that our operations and borrowings
under bank and other credit facilities will provide  sufficient cash to fund our
operating expenses,  capital  expenditures and interest payments on our debt. In
the long-term,  we expect to use internally generated funds and external sources
to satisfy our debt and other long-term liabilities.

         Our liquidity is dependent,  in part, on customers  paying on time. Any
abnormal chargebacks or returns may affect our source of short-term funding. Any
changes in credit terms given to major  customers may have an impact on our cash
flow.  Suppliers' credit is another major source of short-term financing and any
adverse changes in their terms will have negative impact on our cash flow.

         Other  principal  factors  that could  affect the  availability  of our
internally generated funds include:

         o        deterioration of sales due to weakness in the markets in which
                  we sell our products;

         o        decreases in market prices for our products;

         o        increases in costs of raw materials; and

         o        changes in our working capital requirements.

         Principal  factors  that could  affect our  ability to obtain cash from
external sources include:

         o        financial  covenants  contained  in our current or future bank
                  and debt facilities; and

         o        volatility  in the market  price of our common stock or in the
                  stock markets in general.

         The  disposition of our Mexico  operations in 2004 enabled us to return
to the  business  model  that  was  profitable  prior to  implementation  of our
vertically  integrated  manufacturing  operations  that  required  major capital
expenditures and substantial  working capital.  The lease and subsequent sale of
our Mexican facilities  significantly  reduced our working capital  requirements
due to fewer  employees and the  elimination  of fixed  overhead.  Investment in
inventory  also was  substantially  reduced as we no longer need to purchase raw
materials,  such as cotton,  at  commencement of the  manufacturing  process and
carry the costs of such  materials  until  finished  goods  are  shipped  to our
customers.  Reduced  working  capital  and  capital  expenditures  in Mexico has
resulted in a corresponding  reduction of outstanding  indebtedness and interest
payments.  Furthermore,  we no longer need to accept orders with low or negative
margins to fill  production  capacity  in slow  seasons,  which  should  improve
margins and allow us to source production in the best locations worldwide.

         Certain of our private  brands  product lines are generally  associated
with higher selling,  general and  administrative  expenses,  due to significant
design, development, and marketing costs compared to our private label business.


                                       12
<PAGE>


         Cash flows for the years ended December 31, 2003, 2004 and 2005 were as
follows (dollars in thousands):

CASH FLOWS:                                  2003          2004          2005
                                           --------      --------      --------
Net cash provided by (used in)
  operating activities ...............     $  9,935      $ 12,168      $(12,900)
Net cash provided by (used in)
  investing activities ...............     $ (1,504)     $  1,250      $  3,555
Net cash provided by (used in)
  financing activities ...............     $ (6,295)     $(15,552)     $  9,772

         Net cash used in operating  activities  was $12.9  million in 2005,  as
compared to net cash  provided by operating  activities in 2004 of $12.2 million
and $9.9 million in 2003. Net cash used in operating activities in 2005 resulted
primarily  from a net  income of $1.0  million,  reduced by  increases  of $16.8
million in accounts  receivable and $8.5 million in inventory,  partially offset
by depreciation and amortization of $2.1 million and an increase of $9.2 million
in accounts payable. The increase in accounts receivable, inventory and accounts
payable in 2005 was primarily due to increase in sales volume.

         During  2005,  net  cash  provided  by  investing  activities  was $3.6
million,  as  compared  to net cash  provided by  investing  activities  of $1.3
million in 2004 and net cash used in  investing  activities  of $1.5  million in
2003. Cash provided by investing activities in 2005 included  approximately $2.5
million  of  collection  of  advances  from our  Chairman  and $1.2  million  of
collection on notes receivable.

         During 2005, net cash provided by financing activities was $9.8 million
as compared to net cash used in financing  activities  of $15.6  million in 2004
and $6.3  million in 2003.  Net cash  provided by financing  activities  in 2005
included  $13.9  million net proceeds from our credit  facilities  and offset by
$4.1 million net repayment of our short-term bank borrowings.

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

         Following is a summary of our  contractual  obligations  and commercial
commitments available to us as of December 31, 2005 (in millions):

<TABLE>
<CAPTION>
                                                                PAYMENTS DUE BY PERIOD
                                          --------------------------------------------------------------
CONTRACTUAL OBLIGATIONS                                Less than     Between      Between       After
                                            Total        1 year     2-3 years    4-5 years     5 years
---------------------------------------   ----------   ----------   ----------   ----------   ----------
<S>                                       <C>          <C>          <C>          <C>          <C>
Long-term .............................   $     36.3   $     36.1   $      0.2   $     --     $     --
debt(1)
Convertible debentures, net ...........   $      6.9   $     --     $      6.9   $     --     $     --
Operating leases ......................   $      6.8   $      1.2   $      1.3   $      1.2   $      3.1
Minimum royalties .....................   $     17.2   $      4.9   $      5.5   $      2.2   $      4.6
Purchase commitment ...................   $     45.4   $      5.4   $     10.0   $     10.0   $     20.0
                                          ----------   ----------   ----------   ----------   ----------
Total Contractual Cash Obligations ....   $    112.6   $     47.6   $     23.9   $     13.4   $     27.7
---------------------------------------
</TABLE>

(1)      Excludes interest on long-term debt  obligations.  Based on outstanding
         borrowings as of December 31, 2005, and assuming all such  indebtedness
         remained  outstanding  during  2006  and the  interest  rates  remained
         unchanged,  we estimate that our interest cost on long-term  debt would
         be approximately $3.4 million.


                                       13
<PAGE>


<TABLE>
<CAPTION>
                                                                 AMOUNT OF COMMITMENT EXPIRATION PER PERIOD
                                        TOTAL AMOUNTS   -------------------------------------------------------------
OTHER COMMERCIAL                          COMMITTED       Less than        Between         Between          After
COMMITMENTS AVAILABLE TO US                 TO US           1 year        2-3 years       4-5 years        5 years
-------------------------------------   -------------   -------------   -------------   -------------   -------------
<S>                                     <C>             <C>                   <C>             <C>             <C>
Lines of credit .....................   $        61.9   $        61.9         --              --              --
Letters of credit
  (within lines of credit) ..........   $        16.9   $        16.9         --              --              --
Total Commercial Commitments ........   $        61.9   $        61.9         --              --              --
</TABLE>

         On June 13, 2002,  we entered  into a letter of credit  facility of $25
million with UPS Capital Global Trade Finance  Corporation  ("UPS").  Under this
facility,  we may arrange for the issuance of letters of credit and acceptances.
The  facility  is  collateralized  by the  shares and  debentures  of all of our
subsidiaries  in Hong Kong.  In addition to the  guarantees  provided by Tarrant
Apparel  Group and our  subsidiaries,  Fashion  Resource  (TCL) Inc. and Tarrant
Luxembourg  Sarl,  Gerard  Guez,  our  Chairman,  also signed a guarantee  of $5
million in favor of UPS to secure this facility.  This facility bore interest at
10.25% per annum at December 31, 2005.  Under this facility,  we were subject to
certain restrictive  covenants,  including that we maintain a specified tangible
net worth,  fixed charge ratio, and leverage ratio. On June 27, 2005, we amended
the  letter of credit  facility  with UPS to extend the  expiration  date of the
facility  from June 30, 2005 to August 31, 2005 and to reduce the  tangible  net
worth requirement at June 30, 2005. On August 31, 2005, we amended the letter of
credit  facility with UPS to further extend the expiration  date of the facility
to October 31, 2005,  immediately  reduce the maximum  amount of  borrowings  to
$14.5  million on  September 1, 2005 and further  reduced the maximum  amount of
borrowing to $14.0  million on October 1, 2005.  On October 31, 2005, we further
amended the letter of credit  facility with UPS to extend the expiration date of
the  facility to January 31, 2006 and amend the  interest  rate to "prime  rate"
plus 3%. The  facility  amendment  also  provided  for  reduction in the maximum
amount of borrowings  to $13.5 million  commencing on November 1, 2005, to $13.0
million  commencing  on December 1, 2005,  and to $12.5  million  commencing  on
January 1, 2006.  Additionally,  Gerard Guez,  our Chairman,  pledged to UPS 4.6
million  shares of our common  stock held by Mr. Guez to secure the  obligations
under the credit facility. On January 27, 2006, we further amended the letter of
credit  facility  with UPS to extend the  expiration  date of the facility  from
January 31, 2006 to July 31, 2006.  The amendment  provides for reduction of the
maximum amount of borrowings  under the facility to $12.0 million  commencing on
April 1, 2006, $11.5 million commencing on May 1, 2006, $11.0 million commencing
on June 1,  2006 and to $10.5  million  commencing  on July 1,  2006.  Under the
amended  letter of credit  facility,  we are  subject to  restrictive  financial
covenants  of  maintaining  tangible net worth of $25 million as of December 31,
2005  and the  last  day of each  fiscal  quarter  thereafter.  There  is also a
provision  capping maximum capital  expenditures per quarter of $800,000.  As of
December 31, 2005, we were in compliance with the covenants.  As of December 31,
2005,  $9.2  million  was  outstanding  under  this  facility  with  UPS  and an
additional $2.5 million was available for future borrowings.  In addition,  $1.3
million of open letters of credit was outstanding as of December 31, 2005.

         On December 31,  2004,  our Hong Kong  subsidiaries  entered into a new
loan  agreement  with UPS pursuant to which UPS made a $5 million term loan, the
proceeds  of which  were used to repay $5 million  of  indebtedness  owed to UPS
under the letter of credit of facility. The principal amount of this loan is due
and payable in 24 equal monthly  installments  of  approximately  $208,333 each,
plus  interest  equivalent to the "prime rate" plus 2% commencing on February 1,
2005.  This  facility  bore interest at 9.25% per annum at December 31, 2005. On
June 27, 2005, we amended the loan agreement with UPS to reduce the tangible net
worth  requirement at June 30, 2005.  Under the amended loan  agreement,  we are
subject to restrictive  financial covenants of maintaining tangible net worth of
$25  million  at  December  31,  2005 and the last  day of each  fiscal  quarter
thereafter.  There is also a provision  capping maximum capital  expenditure per
quarter at $800,000.  As of December 31, 2005,  we were in  compliance  with the


                                       14
<PAGE>


covenants.  As  of  December  31,  2005,  $2.7  million  was  outstanding.   The
obligations  under the loan  agreement are  collateralized  by the same security
interests and guarantees  provided under our letter of credit facility with UPS.
Additionally,  the term loan is  secured  by two  promissory  notes  payable  to
Tarrant Luxembourg Sarl in the amounts of $2,550,000 and $1,360,000 and a pledge
by Gerard Guez, our Chairman, of 4.6 million shares of our common stock.

         Since March 2003, DBS Bank (Hong Kong) Limited  (formerly  known as Dao
Heng  Bank)  has made  available  a letter of  credit  facility  of up to HKD 20
million  (equivalent to US $2.6 million) to our  subsidiaries in Hong Kong. This
is a demand facility and is secured by the pledge of our office property,  which
is owned by Gerard Guez,  our Chairman and Todd Kay, our Vice  Chairman,  and by
our  guarantee.  The letter of credit  facility was  increased to HKD 30 million
(equivalent  to US$3.9  million) in June 2004.  As of December  31,  2005,  $2.9
million was outstanding under this facility.  In addition,  $1.1 million of open
letters of credit was outstanding and $0 was available for future  borrowings as
of  December  31,  2005.  In  October  2005,  a tax loan for HKD  6.233  million
(equivalent   to  US  $804,000)  was  also  made  available  to  our  Hong  Kong
subsidiaries.  As of December 31, 2005,  $675,000 was outstanding under this tax
loan.

         On October 1, 2004,  we amended and  restated our  previously  existing
debt facility with GMAC Commercial  Credit,  LLC ("GMAC") by entering into a new
factoring agreement with GMAC. The amended and restated agreement (the factoring
agreement)  extended the  expiration  date of the facility to September 30, 2007
and added as parties our subsidiaries Private Brands, Inc and No! Jeans, Inc. In
addition,   in   connection   with  the   factoring   agreement,   our  indirect
majority-owned  subsidiary PBG7, LLC entered into a separate factoring agreement
with  GMAC.  Pursuant  to the  terms  of the  factoring  agreement,  we and  our
subsidiaries  agree to assign and sell to GMAC,  as factor,  all accounts  which
arise from our sale of  merchandise  or rendition of service  created on a going
forward basis. At our request, GMAC, in its discretion,  may make advances to us
up to the lesser of (a) up to 90% of our  accounts on which GMAC has the risk of
loss and (b) $40  million,  minus in each case,  any amount  owed by us to GMAC.
Pursuant to the terms of the PBG7 factoring agreement, PBG7 agreed to assign and
sell to  GMAC,  as  factor,  all  accounts,  which  arise  from  PBG7's  sale of
merchandise or rendition of services created on a going-forward basis. At PBG7's
request, GMAC, in its discretion,  may make advances to PBG7 up to the lesser of
(a) up to 90% of PBG7's  accounts on which GMAC has the risk of loss, and (b) $5
million minus in each case, any amounts owed to GMAC by PBG7. The facility bears
interest at 7.385% per annum and the facility  under PBG7, LLC bears interest at
7.75% per annum at December 31, 2005.  Restrictive  covenants  under the revised
facility include a limit on quarterly  capital expenses of $800,000 and tangible
net worth of $25  million at  December  31,  2005 and at the end of each  fiscal
quarter  thereafter.  As of December 31, 2005,  we were in  compliance  with the
covenants.  A total of $30.6 million was outstanding with respect to receivables
factored under the GMAC facility at December 31, 2005.

          In May 2005,  we amended our factoring  agreement  with GMAC to permit
our subsidiaries  party thereto and us, to borrow up to the lesser of $3 million
or fifty percent (50%) of the value of eligible  inventory.  In connection  with
this  amendment,  we granted GMAC a lien on certain of our inventory  located in
the United  States.  On January  23,  2006,  we further  amended  our  factoring
agreement  with GMAC to increase the amount we may borrow  against  inventory to
the  lesser of $5  million  or 50% of the value of  eligible  inventory.  The $5
million limit will be reduced to $4 million on April 1, 2006 and will be further
reduced to $3 million on July 1, 2006. The maximum borrowing  availability under
the  factoring  agreement,  based on the borrowing  base formula  remains at $40
million.  A total of $3.0  million was  outstanding  under the GMAC  facility at
December 31, 2005 with respect to collateralized inventory.

         The credit  facility  with GMAC and the credit  facility with UPS carry
cross-default  clauses.  A breach  of a  financial  covenant  set by GMAC or UPS
constitutes an event of default under the other credit


                                       15
<PAGE>


facility, entitling both financial institutions to demand payment in full of all
outstanding amounts under their respective debt and credit facilities.

         The  amount we can borrow  under the  factoring  facility  with GMAC is
determined  based on a  defined  borrowing  base  formula  related  to  eligible
accounts receivable.  A significant decrease in eligible accounts receivable due
to the  aging  of  receivables,  can have an  adverse  effect  on our  borrowing
capabilities under our credit facility,  which may adversely affect the adequacy
of our working  capital.  In addition,  we have typically  experienced  seasonal
fluctuations in sales volume. These seasonal fluctuations result in sales volume
decreases  in the first and  fourth  quarters  of each year due to the  seasonal
fluctuations  experienced  by  the  majority  of  our  customers.  During  these
quarters,  borrowing  availability  under our credit  facility may decrease as a
result of decrease in eligible accounts receivables generated from our sales.

         On December 14, 2004, we completed a $10 million  financing through the
issuance of 6% Secured  Convertible  Debentures  ("Debentures")  and warrants to
purchase up to 1,250,000  shares of our common  stock.  Prior to  maturity,  the
investors may convert the Debentures  into shares of our common stock at a price
of $2.00 per share. The warrants have a term of five years and an exercise price
of $2.50 per share.  The Debentures  bear interest at a rate of 6% per annum and
have a term of three years.  We may elect to pay interest on the  Debentures  in
shares of our common stock if certain  conditions  are met,  including a minimum
market price and trading  volume for our common stock.  The  Debentures  contain
customary  events of default and permit the holders  thereof to  accelerate  the
maturity if the full principal  amount  together with interest and other amounts
owing upon the occurrence of such events of default.  The Debentures are secured
by a subordinated lien on certain of our accounts receivable and related assets.
The placement agent in the financing,  received compensation for its services in
the amount of $620,000 in cash and issuance of five year warrants to purchase up
to 200,000 shares of our common stock at an exercise price of $2.50 per share.

         In June 2005, holders of our Debentures  converted an aggregate of $2.3
million of Debentures into 1,133,687 shares of our common stock. In August 2005,
holders of our Debentures  converted an aggregate of $820,000 of Debentures into
410,000 shares of our common stock.  The Debentures were converted at the option
of the holders at a price of $2.00 per share.  Debt discount of $248,000 related
to the intrinsic  value of the  conversion  option of $804,000 was expensed upon
the  conversion.  Of the $620,000  financing  cost paid to the placement  agent,
$191,000 was expensed upon the conversion. The intrinsic value of the conversion
option,  and the value of the  warrant  amortized  in 2005 was  $474,000.  Total
deferred  financing cost amortized in 2005 was $189,000.  Total interest paid to
the holders of the  Debentures  in 2005 was  $539,000.  As of December 31, 2005,
$6.0 million,  net of $0.9 million of debt discount,  remained outstanding under
the Debentures.

         On February  14,  2005,  we borrowed $5 million  from Max Azria,  which
amount  bore  interest  at the rate of 4% per  annum and was  payable  in weekly
installments  of $250,000  beginning on February 28, 2005. In early August 2005,
we repaid the  remaining  balance of this loan in its  entirety.  On January 19,
2006, we borrowed an  additional  $4 million from Max Azria,  which amount bears
interest at the rate of 5.5% per annum and is payable in weekly  installments of
$200,000 beginning on March 1, 2006. This is an unsecured loan.

         We had three equipment loans  outstanding at December 31, 2005 totaling
$83,000.  One  of  these  equipment  loans  bears  interest  at  6%  payable  in
installments  through 2009,  the second loan bears  interest at 15.8% payable in
installments through 2007, and the third loan bears interest at 6.15% payable in
installments through 2007.

         During  2000,  we  financed  equipment  purchases  for a  manufacturing
facility  with  certain  vendors.  A total of $16.9  million was  financed  with
five-year promissory notes, which bear interest ranging from


                                       16
<PAGE>


7.0% to 7.5%,  and were payable in  semiannual  payments  commencing in February
2000. All remaining balances under these notes were paid off in February 2005. A
portion of the debt was denominated in Euros. Unrealized transaction (loss) gain
associated with the debt denominated in Euros totaled  $(561,000),  $367,000 and
$0 for the years ended  December 31, 2003,  2004 and 2005,  respectively.  These
amounts were recorded in other income (expense) in the accompanying consolidated
statements of operations.

         From time to time, we open letters of credit under an uncommitted  line
of credit from Aurora Capital  Associates who issues these letters of credit out
of Israeli  Discount Bank. As of December 31, 2005, $1.0 million was outstanding
under this  facility  and $7.1 million of letters of credit were open under this
arrangement. We pay a commission of 2.25% on all letters of credits issued under
this arrangement.

         The  effective  interest  rates  on  short-term  bank  borrowing  as of
December 31, 2004 and 2005 were 5.7% and 7.8%, respectively.

         We have  financed our  operations  from our cash flow from  operations,
borrowings  under our bank and other  credit  facilities,  issuance of long-term
debt  (including  debt to or arranged by vendors of equipment  purchased for our
Mexican twill and production facility), and sales of equity and debt securities.
Our  short-term  funding relies very heavily on our major  customers,  banks and
suppliers.  From  time to time,  we have had  temporary  over-advances  from our
banks.   Any  withdrawal  of  support  from  these  parties  will  have  serious
consequences on our liquidity.

         From time to time in the past,  we borrowed  funds from,  and  advanced
funds to, certain officers and principal shareholders, including Gerard Guez and
Todd Kay. See disclosure under "-Related Party Transactions" below.

         The Internal  Revenue  Service has proposed  adjustments to our Federal
income tax  returns to  increase  our income  tax  payable  for the years  ended
December 31, 1996 through 2001. This adjustment  would also result in additional
state taxes and  interest.  In  addition,  in July 2004,  the IRS  initiated  an
examination  of our Federal  income tax return for the year ended  December  31,
2002. In March 2005,  the IRS proposed an  adjustment  to our taxable  income of
approximately $6 million related to similar issues  identified in their audit of
the 1996  through  2001  federal  income tax  returns.  We believe  that we have
meritorious   defenses  to  and  intend  to  vigorously   contest  the  proposed
adjustments  made to our  federal  income tax  returns  for the years ended 1996
through  2002.  We believe  that we have  meritorious  defenses to and intend to
vigorously  contest the proposed  adjustments.  If the proposed  adjustments are
upheld through the administrative and legal process,  they could have a material
impact  on our  earnings  and,  in  particular,  cash  flow.  We may not have an
adequate  cash  reserve  to pay the  final  adjustments  resulting  from the IRS
examination.  As a result,  we may be required to arrange for payments over time
or raise additional  capital in order to meet these  obligations.  We believe we
have provided adequate reserves for any reasonably  foreseeable  outcome related
to these matters on the consolidated balance sheets included in the consolidated
financial  statements  under the caption  "Income  Taxes." The maximum amount of
loss in  excess  of the  amount  accrued  in the  financial  statements  is $7.7
million.  We do not believe that the  adjustments,  if any, arising from the IRS
examination,  will result in an additional  income tax liability  beyond what is
recorded in the accompanying consolidated balance sheets.

         We may seek to  finance  future  capital  investment  programs  through
various methods, including, but not limited to, borrowings under our bank credit
facilities,  issuance of long-term debt, sales of equity securities,  leases and
long-term  financing  provided by the sellers of  facilities or the suppliers of
certain  equipment used in such  facilities.  To date,  there is no plan for any
major capital expenditure.


                                       17
<PAGE>


         We do not believe that the  moderate  levels of inflation in the United
States in the last  three  years have had a  significant  effect on net sales or
profitability.

RELATED PARTY TRANSACTIONS

         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 of the Board of Directors, and Todd Kay, our Vice Chairman of the Board
of Directors. We believe, at the time the leases were entered into, the rents on
these  properties  were  comparable to then  prevailing  market  rents.  Our Los
Angeles offices and warehouse is leased on a month to month basis. On January 1,
2006, we entered into a one year lease agreement with Lynx International Limited
for our office space in Hong Kong. We paid  $1,330,000 in each of 2003 and 2004,
and  $1,019,000  in 2005 in rent for office and  warehouse  facilities  at these
locations.

         In February 2004, our Hong Kong  subsidiary  entered into a 50/50 joint
venture  with Auto  Enterprises  Limited,  an unrelated  third party,  to source
products for Seven Licensing  Company,  LLC and our private brands subsidiary in
mainland  China. On May 31, 2004,  after realizing an accumulated  loss from the
venture of  approximately  $200,000 (our share being half), we sold our interest
for $1 to Asia Trading  Limited,  a company  owned by Jacqueline  Rose,  wife of
Gerard Guez.  The venture owed us $221,000 as of December 31, 2004.  This amount
was repaid in the first quarter of 2005.

         On October 16, 2003,  we leased to  affiliates  of Mr.  Kamel Nacif,  a
shareholder  at the time of the  transaction,  for a substantial  portion of our
manufacturing  facilities  and  operations in Mexico  including  real estate and
equipment. We leased our twill mill in Tlaxcala, Mexico, and our sewing plant in
Ajalpan,  Mexico,  for a period of 6 years and for an annual  rental  fee of $11
million.  In  connection  with this lease  transaction,  we also  entered into a
management services agreement pursuant to which Mr. Nacif's affiliates agreed to
manage the operation of our  remaining  facilities in Mexico in exchange for the
use of such facilities.  The term of the management  services agreement was also
for a period of 6 years.  In 2004,  $5.5 million of lease income was recorded in
other  income.  We agreed to  purchase  annually,  six  million  yards of fabric
manufactured at the facilities leased and/or operated by Mr. Nacif's  affiliates
at market prices to be negotiated. We purchased $3.6 million and $5.3 million of
fabric under this agreement in 2003 and 2004, respectively.

         In August 2004,  we entered into a purchase and sale  agreement to sell
to Mr. Nacif's affiliates,  substantially all of our assets and real property in
Mexico,  including  the equipment  and  facilities  we previously  leased to Mr.
Nacif's affiliates. Upon completion of this transaction in the fourth quarter of
2004,  we  entered  into  a  purchase  commitment  agreement  with  Mr.  Nacif's
affiliates to replace our previous purchase commitment  agreement.  Pursuant the
purchase  commitment  agreement  we  agreed to  purchase  $5  million  of fabric
manufactured at the facilities we sold to Mr. Nacif's  affiliates  annually over
the ten-year term of the agreement,  at negotiated market prices.  See Note 5 of
the "Notes to  Consolidated  Financial  Statements".  In 2005, we purchased $6.4
million of fabric,  of which $2.4  million was paid in cash and $4.0 million was
offset against the notes  receivable  principal and accrued interest on the note
receivable from the affiliates of Mr. Kamel Nacif. Net amount due from Mr. Kamel
Nacif and his affiliates was $236,000 as of December 31, 2005.

         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 2005 was  approximately
$4,766,000.  At December 31, 2005, the entire balance due from Mr. Guez totaling
$2.3 million was reflected as a reduction of


                                       18
<PAGE>


shareholders'  equity.  All  advances  to, and  borrowings  from,  Mr. Guez bore
interest at the rate of 7.75% during the period. Total interest paid by Mr. Guez
was $374,000,  $370,000 and $209,000 for the years ended December 31, 2003, 2004
and 2005,  respectively.  Mr. Guez paid expenses on our behalf of  approximately
$400,000  and  $397,000  for  the  years  ended  December  31,  2004  and  2005,
respectively,  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.

         On July 1, 2001, we formed an entity to jointly  market,  share certain
risks and achieve economies of scale with Azteca Production International,  Inc.
("Azteca"),  called United Apparel Ventures, LLC ("UAV"). Azteca is owned by the
brothers of Gerard Guez, our Chairman. This entity was created to coordinate the
production  of apparel for a single  customer of our  branded  business.  UAV is
owned 50.1% by Tag Mex, Inc., our wholly owned subsidiary,  and 49.9% by Azteca.
Results of the  operation of UAV have been  consolidated  into our results since
July 2001 with the minority  partner's  share of all gains and loses  eliminated
through the  minority  interest  line in our  financial  statements.  Due to the
restructuring of our Mexico  operations,  we discontinued  manufacturing for UAV
customers in the second quarter of 2004. Two and one half percent of gross sales
as management fees were paid in 2003 and 2004 to each of the members of UAV, per
the operating agreement.  We purchased $37.1 million, $11.5 million and $135,000
of finished goods and service from Azteca and its affiliates for the years ended
December 31, 2003,  2004 and 2005,  respectively.  Our total sales of fabric and
service to Azteca in 2003,  2004 and 2005 were $9.9  million,  $1.0  million and
$88,000, respectively.

         Since June 2003, UAV had been selling to Seven Licensing  Company,  LLC
("Seven Licensing"),  jeans wear bearing the brand "Seven7", which is ultimately
purchased by Express.  Seven Licensing is beneficially  owned by Gerard Guez. In
the  third  quarter  of 2004,  in  order to  strengthen  our own  private  brand
business,  we decided to discontinue  sourcing for Seven7.  Total sales to Seven
Licensing in the year ended December 31, 2003,  2004 and 2005 were $8.1 million,
$2.6 million and $0, respectively.

         At December 31, 2005,  Messrs.  Guez and Kay beneficially owned 590,000
and 1,003,500  shares,  respectively,  of common stock of Tag-It  Pacific,  Inc.
("Tag-It"),  collectively  representing 8.7% of Tag-It Pacific's common stock at
December  31,  2005.  Tag-It  is  a  provider  of  brand  identity  programs  to
manufacturers  and  retailers  of apparel and  accessories.  Tag-It  assumed the
responsibility  for  managing  and  sourcing  all  trim  and  packaging  used in
connection with products  manufactured by or on our behalf in Mexico. We believe
that the terms of this  arrangement,  which is subject to the  acceptance of our
customers,  are no less favorable to us than could be obtained from unaffiliated
third parties.  Due to the  restructuring  of our Mexico  operations,  Tag-It no
longer manages our trim and packaging requirements.  We purchased $16.8 million,
$1.0  million and $450,000 of trim from Tag-It  during the years ended  December
31, 2003, 2004 and 2005. We sold to Tag-It $1.5 million from our trim and fabric
inventory for the year ended  December 31, 2003. In the past, we guaranteed  the
indebtedness of Tag-It for the purchase of trim on our behalf. See Note 8 of the
"Notes to Consolidated Financial Statements."

         We  believe  that  each of the  transactions  described  above has been
entered into on terms no less favorable to us than could have been obtained from
unaffiliated  third  parties.  We have  adopted a policy  that any  transactions
between us and any of our affiliates or related parties, including our executive
officers,  directors,  the family members of those  individuals and any of their
affiliates,  must (i) 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 (ii) be on terms no less  favorable  to us than could be obtained
from unaffiliated third parties.


                                       19
<PAGE>


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         FOREIGN CURRENCY RISK. Our earnings are affected by fluctuations in the
value of the U.S. dollar as compared to foreign  currencies as a result of doing
business in Mexico as well as certain debt denominated in Euro. As a result,  we
bear the risk of exchange rate gains and losses that may result in the future as
a result of this financing. At times we use forward exchange contracts to reduce
the effect of fluctuations of foreign  currencies on purchases and  commitments.
These  short-term  assets  and  commitments  are  principally  related  to trade
payables  positions  and fixed  asset  purchase  obligations.  We do not utilize
derivative financial  instruments for trading or other speculative  purposes. We
actively evaluate the  creditworthiness  of the financial  institutions that are
counter parties to derivative  financial  instruments,  and we do not expect any
counter parties to fail to meet their obligations.

         INTEREST RATE RISK.  Because our  obligations  under our various credit
agreements  bear interest at floating  rates  (primarily  prime  rates),  we are
sensitive  to  changes in  prevailing  interest  rates.  Any major  increase  or
decrease in market  interest rates that affect our financial  instruments  would
have a material  impact on earning or cash flows during the next fiscal year. As
of December 31, 2005,  we had $7.1 million of  fixed-rate  borrowings  and $49.1
million of variable-rate borrowings outstanding. A one percentage point increase
in interest rates would result in an annualized  increase to interest expense of
approximately $0.5 million on our variable-rate borrowings.

         Our interest  expense is  sensitive to changes in the general  level of
U.S.  interest  rates.  In this regard,  changes in U.S.  interest  rates affect
interest paid on our debt. A majority of our credit  facilities  are at variable
rates.

ITEM 9A. CONTROLS AND PROCEDURES

         EVALUATION OF CONTROLS AND PROCEDURES

         Members of the  company's  management,  including  our Chief  Executive
Officer and Chief Financial  Officer,  have evaluated the  effectiveness  of our
disclosure controls and procedures,  as defined by paragraph (e) of Exchange Act
Rules 13a-15 or 15d-15,  as of December 31, 2005,  the end of the period covered
by this  report.  Members  of the  Company's  management,  including  our  Chief
Executive Officer and Chief Financial  Officer,  also conducted an evaluation of
our internal control over financial  reporting to determine  whether any changes
occurred during the further quarter of 2005 that have  materially  affected,  or
are reasonably likely to materially  affect, our internal control over financial
reporting.  Based upon that  evaluation,  the Chief Executive  Officer and Chief
Financial  Officer  concluded  that our  disclosure  controls and procedures are
effective.

         CHANGES IN CONTROLS AND PROCEDURES

         During  the  fourth  quarter  of 2005,  there  were no  changes  in our
internal control over financial accounting that has materially  affected,  or is
reasonably  likely to materially  affect,  our internal  control over  financial
reporting.


                                      20
<PAGE>


                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

         (a)      Financial  Statements  and Schedule.  Reference is made to the
Index to Financial  Statements  and Schedule on page F-1 for a list of financial
statements  and the financial  statement  schedule filed as part of this report.
All other  schedules are omitted because they are not applicable or the required
information is shown in the Company's financial  statements or the related notes
thereto.

         (b)      Exhibits.  See the  Exhibit  Index  attached to this Form 10-K
annual report.


                                       21
<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
                                                    Chairman of the Board

                                POWER OF ATTORNEY

         Pursuant to the  requirements  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

                               Chief Executive Officer          January 31, 2007
     /S/ GERARD GUEZ           and Chairman of the Board
--------------------------     of Directors (Principal
       Gerard Guez             Executive Officer)

            *                  Vice Chairman of the             January 31, 2007
--------------------------     Board of Directors
        Todd Kay

    /S/ CORAZON REYES          Chief Financial Officer,
                               Treasurer and Director           January 31, 2007
--------------------------     (Principal Financial and
      Corazon Reyes            Accounting Officer)


            *                  Director                         January 31, 2007
--------------------------
     Milton Koffman

            *                  Director                         January 31, 2007
--------------------------
    Stephane Farouze

            *                  Director                         January 31, 2007
--------------------------
     Mitchell Simbal

            *                  Director                         January 31, 2007
--------------------------
     Joseph Mizrachi

            *                  Director                         January 31, 2007
--------------------------
       Simon Mani


* By:    /S/ CORAZON REYES
         ----------------------------------
         Corazon Reyes, As Attorney-In-Fact


                                      S-1
<PAGE>


                              TARRANT APPAREL GROUP

                                  EXHIBIT INDEX

EXHIBIT
NUMBER   DESCRIPTION
-------  -----------------------------------------------------------------------

3.1      Restated Articles of Incorporation. (1)

3.1.1    Certificate of Amendment of Restated Articles of Incorporation. (7)

3.1.2    Certificate of Amendment of Restated Articles of Incorporation. (7)

3.1.3    Certificate of Amendment of Restated Articles of Incorporation. (14)

3.2      Restated Bylaws. (1)

4.1      Specimen of Common Stock Certificate. (2)

4.2      Rights Agreement dated as of November 21, 2003, between Tarrant Apparel
         Group and Computershare Trust Company,  as Rights Agent,  including the
         Form of Rights  Certificate  and the  Summary  of  Rights  to  Purchase
         Preferred Stock,  attached  thereto as Exhibits B and C,  respectively.
         (13)

4.3      Certificate of Determination of Preferences,  Rights and Limitations of
         Series B Preferred Stock. (15)

4.4      Form of 6% Secured Convertible Debenture. (22)

10.1     Tarrant Apparel Group Employee Incentive Plan.* (19)

10.2     Services  Agreement  dated as of October 1, 1994,  by and  between  the
         Company and Lynx International Limited. (1)

10.3     Indemnification  Agreement  dated as of March  14,  1995,  by and among
         Tarrant Apparel Group, Gerard Guez and Todd Kay. (2)

10.4     Employment  Agreement effective January 1, 1998, by and between Tarrant
         Apparel Group and Gerard Guez.* (4)

10.4.1   First amendment to Employment Agreement dated as of January 10, 2000 by
         and between Gerard Guez and Tarrant Apparel Group.* (6)

10.4.2   Second  Amendment to Employment  Agreement  dated April 1, 2003 between
         Tarrant Apparel Group and Gerard Guez.* (10)

10.4.3   Third Amendment to Employment Agreement, effective as of April 1, 2004,
         between Tarrant Apparel Group and Gerard Guez.* (20)

10.5     Employment  Agreement effective January 1, 1998, by and between Tarrant
         Apparel Group and Todd Kay.* (4)

10.5.1   First Amendment to Employment Agreement dated as of January 10, 2000 by
         and between Todd Kay and Tarrant Apparel Group.* (6)

10.5.2   Second  Amendment to Employment  Agreement  dated April 1, 2003 between
         Tarrant Apparel Group and Todd Kay.* (10)


                                       EX-1
<PAGE>


EXHIBIT
NUMBER   DESCRIPTION
-------  -----------------------------------------------------------------------

10.5.3   Third Amendment to Employment Agreement, effective as of April 1, 2004,
         between Tarrant Apparel Group and Todd Kay.* (20)

10.6     Buying  Agency  Agreement  executed  as of April  4,  1995,  by  Azteca
         Production  International,  Inc. and Tarrant Company Ltd., with Tarrant
         Apparel Group acknowledging as to certain matters. (2)

10.7     Form of Indemnification  Agreement with directors and certain executive
         officers. (3)

10.8     Factoring  Agreement  dated as of September  29, 2004 by and among GMAC
         Commercial  Finance LLC and Tarrant  Apparel  Group,  Fashion  Resource
         (TCL),  Inc., TAG Mex,  Inc.,  United Apparel  Ventures,  LLC,  Private
         Brands, Inc. and NO! Jeans, Inc. (20)

10.8.1   First  Amendment  Factoring  Agreement  dated as of May 9,  2005 by and
         among GMAC Commercial  Finance LLC and Tarrant  Apparel Group,  Fashion
         Resource  (TCL),  Inc., TAG Mex, Inc.,  United Apparel  Ventures,  LLC,
         Private Brands, Inc. and NO! Jeans, Inc. (25)

10.8.2   Inventory  Security  Agreement by and among GMAC Commercial Finance LLC
         and Tarrant Apparel Group, Fashion Resource (TCL), Inc., TAG Mex, Inc.,
         United Apparel Ventures,  LLC, Private Brands, Inc. and NO! Jeans, Inc.
         (25)

10.9     Promissory   note  dated   February  28,  2001  in  the  amount  of  US
         $4,119,545.06 to pay to the order of Standard Chartered Bank (5)

10.10    Amended and Restated Limited Liability  Company Operating  Agreement of
         United Apparel  Ventures,  dated as of October 1, 2002,  between Azteca
         Production International, Inc. and Tag Mex, Inc. (9)

10.11    Guaranty  Agreement dated as of May 30, 2002 by and between UPS Capital
         Global Trade Finance  Corporation and Tarrant Apparel Group and Fashion
         Resource (TCL), Inc. (7)

10.11.1  Conditional  Consent  Agreement  dated  December 31, 2002,  between UPS
         Capital Global Trade Finance  Corporation  and Fashion  Resource (TCL),
         Inc. (8)

10.12    Guaranty  Agreement dated as of May 30, 2002 by and between UPS Capital
         Global Trade Finance Corporation and Gerard Guez. (7)

10.13    Syndicated Letter of Credit Facility dated June 13, 2002 by and between
         Tarrant Company Limited, Marble Limited and Trade Link Holdings Limited
         as Borrowers and UPS Capital Global Trade Finance  Corporation as Agent
         and Issuer and Certain Banks and Financial Institutions as Banks. (7)

10.13.1  Charge Over Shares dated June 13, 2002 by Fashion Resource (TCL),  Inc.
         in favor of UPS Capital Global Trade Finance Corporation. (7)

10.13.2  Syndicated  Composite  Guarantee  and  Debenture  dated  June 13,  2002
         between Tarrant Company Limited, Marble Limited and Trade link Holdings
         Limited and UPS Capital Global Trade Finance Corporation. (7)

10.13.3  Charge Over Shares dated February 26, 2003, between Machrima Luxembourg
         International Sarl and UPS Global Trade Finance Corporation. (9)

10.13.4  Fourth Deed of Variation to Syndicated  Letter of Credit Facility dated
         June 18, 2003 among Tarrant Company  Limited,  Marble Limited and Trade
         Link Holdings Limited and UPS Capital Global Trade Finance Corporation.
         (10)


                                      EX-2
<PAGE>


EXHIBIT
NUMBER   DESCRIPTION
-------  -----------------------------------------------------------------------

10.13.5  Letter  Agreement  dated  September  1,  2003,  among  Tarrant  Company
         Limited,  Marble Limited,  Trade Link Holdings  Limited and UPS Capital
         Global Trade Finance Corporation. (12)

10.13.6  Fifth Deed of Variation to Syndicated  Letter of Credit  Facility dated
         December 23, 2003 among Tarrant  Company  Limited,  Marble  Limited and
         Trade Link  Holdings  Limited  and UPS  Capital  Global  Trade  Finance
         Corporation. (17)

10.13.7  Sixth Deed of Variation to Syndicated  Letter of Credit  Facility dated
         March 17, 2004 among Tarrant Company Limited,  Marble Limited and Trade
         Link Holdings Limited and UPS Capital Global Trade Finance Corporation.
         (18)

10.13.8  Seventh Deed of Variation to Syndicated Letter of Credit Facility dated
         May 5, 2004 among Tarrant  Company  Limited,  Marble  Limited and Trade
         Link Holdings Limited and UPS Capital Global Trade Finance Corporation.
         (19)

10.13.9  Eighth  Deed of  Variation  to  Syndicated  Letter of  Credit  Facility
         effective  as of May 10, 2004 among  Tarrant  Company  Limited,  Marble
         Limited and Trade Link  Holdings  Limited and UPS Capital  Global Trade
         Finance Corporation. (19)

10.13.10 Ninth  Deed of  Variation  to  Syndicated  Letter  of  Credit  Facility
         effective  as of  September  30, 2004 among  Tarrant  Company  Limited,
         Marble  Limited and Trade Link Holdings  Limited and UPS Capital Global
         Trade Finance Corporation. (20)

10.13.11 Tenth  Deed of  Variation  to  Syndicated  Letter  of  Credit  Facility
         effective as of December 31, 2004 among Tarrant Company Limited, Marble
         Limited and Trade Link  Holdings  Limited and UPS Capital  Global Trade
         Finance Corporation. (23)

10.13.12 Loan  Agreement  dated  December 31, 2004 by and among Tarrant  Company
         Limited, Marble Limited and Trade Link Holdings Limited and UPS Capital
         Global Trade Finance Corporation. (23)

10.13.13 Amendment  Agreement to  Syndicated  Composite  Guarantee and Debenture
         dated December 31, 2004, by and among Tarrant Company  Limited,  Marble
         Limited and Trade Link  Holdings  Limited and UPS Capital  Global Trade
         Finance Corporation. (23)

10.13.14 Guaranty and Security  Agreement  dated  December 31, 2004 by and among
         Tarrant Apparel Group,  Fashion  Resource  (TCL),  Inc. and UPS Capital
         Global Trade Finance Corporation. (23)

10.13.15 Guaranty and Security  Agreement dated December 31, 2004 by and between
         Tarrant   Luxembourg   Sarl  and  UPS  Capital   Global  Trade  Finance
         Corporation. (23)

10.13.16 Amendment  Agreement to Charge Over Shares  dated  December 31, 2004 by
         and  between  Tarrant  Luxembourg  Sarl and UPS  Capital  Global  Trade
         Finance Corporation. (23)

10.13.17 Eleventh  Deed of Variation  to  Syndicated  Letter of Credit  Facility
         among Tarrant Company  Limited,  Marble Limited and Trade Link Holdings
         Limited and UPS Capital Global Trade Finance Corporation. (25)

10.13.18 Twelfth  Deed of  Variation  to  Syndicated  Letter of Credit  Facility
         effective as of June 27, 2005 among  Tarrant  Company  Limited,  Marble
         Limited and Trade Link  Holdings  Limited and UPS Capital  Global Trade
         Finance Corporation. (25)

10.13.19 First Deed of Variation to Loan Agreement effective as of June 27, 2005
         among Tarrant Company  Limited,  Marble Limited and Trade Link Holdings
         Limited and UPS Capital Global Trade Finance Corporation. (25)


                                      EX-3
<PAGE>


EXHIBIT
NUMBER   DESCRIPTION
-------  -----------------------------------------------------------------------

10.13.20 Second Deed of  Variation  to Loan  Agreement  effective as of July 29,
         2005 among  Tarrant  Company  Limited,  Marble  Limited  and Trade Link
         Holdings Limited and UPS Capital Global Trade Finance Corporation. (26)

10.13.21 Thirteenth  Deed of Variation to Syndicated  Letter of Credit  Facility
         effective as of July 29, 2005 among  Tarrant  Company  Limited,  Marble
         Limited and Trade Link  Holdings  Limited and UPS Capital  Global Trade
         Finance Corporation. (26)

10.13.22 Fourteenth  Deed of Variation to Syndicated  Letter of Credit  Facility
         effective as of August 31, 2005 among Tarrant Company  Limited,  Marble
         Limited and Trade Link  Holdings  Limited and UPS Capital  Global Trade
         Finance Corporation. (26)

10.13.23 Fifteenth  Deed of Variation to  Syndicated  Letter of Credit  Facility
         effective as of October 31, 2005 among Tarrant Company Limited,  Marble
         Limited and Trade Link  Holdings  Limited and UPS Capital  Global Trade
         Finance Corporation. (27)

10.14    Assignment  of  Promissory  Note by  Tarrant  Apparel  Group to Tarrant
         Company  Limited and to Trade Link Holdings  Company dated December 26,
         2001. (7)

10.15    Exclusive Distribution Agreement dated April 1, 2003, between Federated
         Merchandising Group, an unincorporated division of Federated Department
         Stores, and Private Brands, Inc. (9)

10.15.1  Amendment No. 1 to Exclusive  Distribution  Agreement  dated as of June
         22, 2004,  between  Federated  Merchandising  Group, an  unincorporated
         division of Federated Department Stores, and Private Brands, Inc. (19)

10.15.2  Amendment No. 2 to Exclusive  Distribution  Agreement dated as of March
         7, 2005,  between Macy's  Merchandising  Group, LLC and Private Brands,
         Inc. (24)

10.15.3  Trademark  Sublicense  Agreement  dated as of March  3,  2005,  between
         Macy's Merchandising Group, LLC and Private Brands, Inc. (24)

10.16    Unconditional  Guaranty of Performance  dated April 1, 2003, by Tarrant
         Apparel Group. (9)

10.17    Promissory  Note  dated May 31,  2003  made by Gerard  Guez in favor of
         Tarrant Apparel Group. (10)

10.18    Indemnification  Agreement dated April 10, 2003 between Tarrant Apparel
         Group and Seven Licensing Company, LLC. (10)

10.19    Registration  Rights  Agreement  dated  October 17, 2003,  by and among
         Tarrant  Apparel  Group and  Sanders  Morris  Harris  Inc. as agent and
         attorney-in-fact for the Purchasers identified therein. (11)

10.20    Common Stock  Purchase  Warrant  dated October 17, 2003, by and between
         Tarrant Apparel Group and Sanders Morris Harris Inc. (11)

10.21    Employment  Agreement,  effective as of September 1, 2003,  between the
         Company and Barry Aved. (12)

10.22    Employment Agreement, dated September 16, 2005, between Tarrant Company
         Limited and Henry Chu. (26)

10.23    Common Stock  Purchase  Warrant dated January 26, 2004 between  Tarrant
         Apparel Group and Sanders Morris Harris Inc. (16)

10.24    Agreement  for Purchase of Assets  dated August 13, 2004 among  Tarrant
         Mexico S. de R.L. de C.V.,  Acabados Y Cortes Textiles S.A. de C.V. and
         Construcciones Solticio S.A. de C.V. (20)


                                      EX-4
<PAGE>


EXHIBIT
NUMBER   DESCRIPTION
-------  -----------------------------------------------------------------------

10.24.1  Amendment  No. 1 to Agreement  for Purchase of Assets dated October 29,
         2004  among  Tarrant  Mexico  S. de R.L.  de  C.V.,  Acabados  Y Cortes
         Textiles S.A. de C.V. and Construcciones Solticio S.A. de C.V. (20)

10.25    Termination Agreement dated August 13, 2004 among Tarrant Mexico, S. de
         R.L. de C.V., Inmobiliaria Cuadros, S.A., de C.V. and Acabados y Cortes
         Textiles S.A. de C.V. (20)

10.26    Securities  Purchase  Agreement  dated December 6, 2004, by and between
         Tarrant  Apparel Group and the investors  listed on the signature pages
         thereto. (21)

10.27    Registration  Rights  Agreement  dated  December 14, 2004, by and among
         Tarrant  Apparel Group and the investors  listed on the signature pages
         thereto. (22)

10.28    Security  Agreement  dated  December  14,  2004,  by and among  Tarrant
         Apparel Group and the investors  listed on the signature pages thereto.
         (22)

10.29    Intercreditor  Agreement  dated  December 14, 2004 by and among Tarrant
         Apparel Group, GMAC Commercial  Finance,  LLC, UPS Capital Global Trade
         Finance Corporation and T.R. Winston & Company, LLC. (22)

10.30    Common Stock Purchase Warrant dated December 14, 2004 issued by Tarrant
         Apparel Group in favor of T.R. Winston & Company, LLC. (22)

10.31    Form of Common Stock Purchase Warrant. (22)

10.32    Promissory  Note in the  principal  amount  of  $5,000,000  dated as of
         February  15,  2005,  issued by Tarrant  Apparel  Group in favor of Max
         Azria. (24)

10.33    Tenancy Agreement,  dated July 1, 2005, between Tarrant Company Limited
         and Lynx International Limited. (26)

14.1     Code of Ethical Conduct. (17)

21.1     Subsidiaries. (27)

23.1     Consent of Singer Lewak Greenbaum & Goldstein LLP. (27)

23.2     Consent of Grant Thornton LLP. (27)

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.

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

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

-------------------------------
*        Management contract or compensatory plan or arrangement.

(1)      Filed as an exhibit to the Company's Registration Statement on Form S-1
         filed with the Securities and Exchange  Commission on May 4, 1995 (File
         No. 33-91874).

(2)      Filed as an exhibit to  Amendment  No. 1 to  Registration  Statement on
         Form S-1 filed with the Securities and Exchange  Commission on July 15,
         1995.

(3)      Filed as an exhibit to the Company's  Quarterly Report on Form 10-Q for
         the quarter ended June 30, 1997.


                                      EX-5
<PAGE>


(4)      Filed as an exhibit to the Company's Annual Report on Form 10-K for the
         year ended December 31, 1998.

(5)      Filed as an exhibit to the Company's Annual Report on Form 10-K for the
         year ending December 31, 2000.

(6)      Filed as an exhibit to the Company's  Quarterly Report on Form 10-Q for
         the quarter ending March 31, 2001.

(7)      Filed as an exhibit to the Company's  Quarterly  Report on Form 10Q for
         the quarter ending June 30, 2002.

(8)      Filed as an exhibit to the Company's  Annual Report on Form 10K for the
         year ending December 31, 2002.

(9)      Filed as an exhibit to the Company's  Quarterly  Report on Form 10Q for
         the quarter ending March 31, 2003.

(10)     Filed as an exhibit to the Company's  Quarterly  Report on Form 10Q for
         the quarter ending June 30, 2003.

(11)     Filed as an exhibit to the Company's  Current  Report on Form 8-K dated
         October 16, 2003.

(12)     Filed as an exhibit to the Company's  Quarterly  Report on Form 10Q for
         the quarter ending September 30, 2003.

(13)     Filed as an exhibit to the Company's  Current  Report on Form 8-K dated
         November 12, 2003.

(14)     Filed as an exhibit to the Company's  Current  Report on Form 8-K dated
         December 4, 2003.

(15)     Filed as an exhibit to the  Company's  Amendment  to Current  Report on
         Form 8-K/A, filed December 12, 2003.

(16)     Filed as an exhibit to the Company's  Current  Report on Form 8-K dated
         January 23, 2004.

(17)     Filed as an exhibit  to the  Company's  Annual  Report on Form 10-K for
         year ending December 31, 2003.

(18)     Filed as an exhibit to the Company's  Quarterly Report on Form 10-Q for
         the quarter ending March 31, 2004.

(19)     Filed as an exhibit to the Company's  Quarterly Report on Form 10-Q for
         the quarter ending June 30, 2004.

(20)     Filed as an exhibit to the Company's  Quarterly Report on Form 10-Q for
         the quarter ending September 30, 2004.

(21)     Filed as an exhibit to the Company's  Current  Report on Form 8-K dated
         December 6, 2004.

(22)     Filed as an exhibit to the Company's  Current  Report on Form 8-K dated
         December 14, 2004.

(23)     Filed as an exhibit to the Company's Annual Report on Form 10-K for the
         year ending December 31, 2004.

(24)     Filed as an exhibit to the Company's  Quarterly Report on Form 10-Q for
         the quarter ending March 31, 2005.

(25)     Filed as an exhibit to the Company's  Quarterly Report on Form 10-Q for
         the quarter ending June 30, 2005.

(26)     Filed as an exhibit to the Company's  Quarterly Report on Form 10-Q for
         the quarter ending September 30, 2005.

(27)     Previously filed on Form 10-K for the year ended December 31, 2005.


                                      EX-6