EXHIBIT 10.4


March 16, 2006

Jonathan Burstein
3484 Daniella Ct.
Calabasas, CA 91302

Dear Jonathan:

Tag-It Pacific Inc. (the "Company") is pleased to offer you continued employment
on the following terms:

POSITION:                  You will serve in a full-time  capacity as  Executive
                           Vice President of operations.  You will report to the
                           CEO and  shall  perform  duties  customary  for  such
                           position  and  such  other  related   duties  as  are
                           assigned  by  the  CEO.  You  shall  (i)  faithfully,
                           diligently  and to the best of your  ability  perform
                           such duties,  (ii) devote your full business time and
                           attention to the affairs of the Company and (iii) use
                           your best efforts to further the  Company's  business
                           interests.  By signing this agreement,  you represent
                           and  warrant  to the  Company  that you are  under no
                           contractual   commitments   inconsistent   with  your
                           obligations to the Company.

BASE SALARY:               Effective January 1, 2006, your annual salary will be
                           $2400,000  payable in  accordance  with the Company's
                           standard payroll schedule. As of January 1, 2007 your
                           annual salary will be $300,000.  Additionally,  on or
                           before  December  31,  2006,  the Company will pay to
                           you, at its option,  either:  (i) $60,000 in cash, or
                           (ii) (A) 162,162  shares of Common Stock,  and (B) an
                           option to  purchase  162,162  shares of Common  Stock
                           with an exercise price equal to the FMV Price,  which
                           options  shall cliff vest at December 31,  2006.  The
                           stock  grant  and  the   companion   option  will  be
                           evidenced  by written  grant and  option  agreements.
                           "FMV Price" will be the fair market  value of a share
                           of  the  Company's  common  stock  on  the  date  the
                           issuance  of the stock and option is  approved by the
                           Company's Board.

BONUS:                     You will have the  opportunity to earn an annual cash
                           bonus  in  accordance  with the  Company's  executive
                           bonus pool which is based on a  calculation  of EBIT,
                           as determined by the Company in its discretion.

INCENTIVE STOCK
COMPENSATION:              In January  2006,  the  Company  granted  you a stock
                           option  for  425,000  shares of common  stock with an
                           exercise  price of $0.37  per  share.  The  Company's
                           standard stock option  agreement  terms will apply to
                           this grant,  with the vesting over three  years:  (a)
                           33.33%  will  vest  on  your  first   anniversary  of
                           employment;  and (b) the unvested  balance shall vest
                           1/36 of the original grant each month thereafter.


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BENEFITS PLAN:             You will be eligible  for the  Company's  benefits in
                           accordance with the Company's existing benefits plan.

AT WILL:                   The Company's  employees  serve on an at-will  basis.
                           Your  employment  is voluntary and for no set period.
                           If you accept  employment with the Company,  you will
                           be  free  to  resign  at  any  time,  without  cause.
                           Likewise,  the Company will be free to terminate your
                           employment  at  any  time,  with  or  without  cause.
                           Although employment policies and practices may change
                           from  time  to  time,  the  at-will  nature  of  your
                           employment  relationship may not be changed unless it
                           is  changed in a written  document  signed by you and
                           the Company.

TERMINATION WITHOUT
CAUSE:                     Subject to the provisions below, if terminated by the
                           Company  without  cause  or  due  to  your  death  or
                           permanent and total disability, conditioned upon your
                           (or your estate's)  execution and non-revocation of a
                           full release and waiver of claims agreement in a form
                           prescribed by the Company,  you (or your estate) will
                           receive  (i) 18  months  of  your  then-current  base
                           salary,  payable  in  6  equal  monthly  installments
                           commencing  on the  first day of the  calendar  month
                           immediately following such termination and thereafter
                           on the first day of each  subsequent  calendar month;
                           (ii)  18  months  of  continued  coverage  under  the
                           company's  group  health plan at the same cost to you
                           (and/or your dependents) as immediately prior to your
                           termination,    subject   to   your    (and/or   your
                           dependents')  making a valid "COBRA"  election and to
                           any  cost  increases   affecting  plan   participants
                           generally; and (iii) accelerated stock option vesting
                           deemed to occur immediately prior to your termination
                           with   respect  to  that   portion  of  any  and  all
                           outstanding  options then held by you that would have
                           vested  during  the 12 months  immediately  following
                           your   termination   absent  such   termination  (the
                           "Severance").

TERMINATION WITH CAUSE:    For  purposes of this  Agreement,  "cause" is defined
                           as:

                           misconduct,  including:  (i) conviction of any felony
                           or any crime involving moral turpitude or dishonesty;
                           (ii)  participation  in a fraud or act of  dishonesty
                           against the Company as determined  by the CEO;  (iii)
                           willful   breach  of  the   Company's   policies   as
                           determined by the CEO; (iv) intentional damage to the
                           Company's  property  as  determined  by the CEO;  (v)
                           material   breach  of  this   agreement  or  Employee
                           Non-Disclosure and Invention  Agreement as determined
                           by  the  CEO;  or  (vi) a  failure  or  refusal  in a
                           material  respect of by you to follow the  reasonable
                           policies or directions of the Company as specified by
                           the CEO or to carry out the  duties of your  position
                           after being  provided with notice of such failure and
                           an  opportunity  to cure  within  thirty (30) days of
                           receipt  of such  notice  (and  satisfactory  cure as
                           determined by the CEO).

                           In the event of  termination  for cause,  the Company
                           shall pay you all compensation (including base salary
                           and  accrued  vacation)  due to you  on the  date  of
                           termination.  There will be no  compensation  paid or
                           stock vested beyond the termination date.


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<PAGE>


CHANGE OF CONTROL:         Immediately  prior  to  a  "Change  of  Control"  (as
                           defined below), you shall vest with respect to 50% of
                           your  then-outstanding  unvested  stock  options.  In
                           addition,  any  unvested,  outstanding  stock options
                           held by you immediately prior to a termination by you
                           or the Company of your employment within the 12-month
                           period  following  such  Change of Control for any of
                           the  following  reasons shall  thereupon  immediately
                           vest in full:

                           1) you  are  terminated  by  the  acquirer,  2)  your
                           position  is reduced  to less than a general  manager
                           position or a vice president level position,  3) your
                           base pay is reduced  below your  prevailing  base pay
                           amount at the time of the Change of Control or 4) you
                           are asked to relocate to an office more than 60 miles
                           from your office prior to the Change of Control.

                           "CHANGE OF CONTROL"  means (i) any  consolidation  or
                           merger  of  the  Company   with  or  into  any  other
                           corporation  or other entity or person,  or any other
                           corporate  reorganization,  in which the stockholders
                           of   the   Company    immediately   prior   to   such
                           consolidation,  merger  or  reorganization,  own less
                           than  fifty  percent  (50%) of the  Company's  voting
                           power immediately after such consolidation, merger or
                           reorganization,  or  any  transaction  or  series  of
                           related  transactions to which the Company is a party
                           in which in  excess  of  fifty  percent  (50%) of the
                           Company's voting power is transferred,  excluding any
                           consolidation  or  merger  effected   exclusively  to
                           change  the  domicile  of the  Company or any sale of
                           Company's securities for financing purposes;  or (ii)
                           a  sale,  lease  or  other   disposition  of  all  or
                           substantially all of the assets of the Company.

CODE SECTION 409A          Notwithstanding  anything  to the  contrary  in  this
                           agreement,  no  compensation  or benefits,  including
                           without   limitation   any   Severance   payments  or
                           benefits,  shall be paid to you  during  the  6-month
                           period   following  your  "separation  from  service"
                           (within  the meaning of Section  409A(a)(2)(A)(i)  of
                           the Internal  Revenue  Code of 1986,  as amended (the
                           "CODE")) to the extent that the Company determines in
                           good faith that  paying  such  amounts at the time or
                           times  indicated in this agreement would cause you to
                           incur  additional tax under Code Section 409A. If the
                           payment of any such amounts is delayed as a result of
                           the  previous   sentence,   then  on  the  first  day
                           following the end of such 6-month period, the Company
                           will  pay  you  a  lump-sum   amount   equal  to  the
                           cumulative  amount  that  would have  otherwise  been
                           payable to you during such 6-month period.

                           The  compensation  and  benefits  payable  under this
                           agreement,    including   without    limitation   the
                           Severance,    are   not   intended   to    constitute
                           "nonqualified   deferred   compensation"  within  the
                           meaning of Code Section 409A.  However, to the extent
                           that  the  Company  reasonably  determines  that  any
                           compensation or benefits payable under this agreement
                           may be subject to Code Section 409A,  this  agreement
                           shall  incorporate the terms and conditions  required


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<PAGE>


                           by Code  Section  409A  and  Department  of  Treasury
                           regulations as reasonably  determined by the Company.
                           To the extent  applicable,  this  agreement  shall be
                           interpreted in accordance  with Code Section 409A and
                           Department   of   Treasury   regulations   and  other
                           interpretive  guidance  issued  thereunder.   If  the
                           Company  reasonably  determines that any compensation
                           or  benefits  payable  under  this  agreement  may be
                           subject to Code Section  409A and related  Department
                           of Treasury  guidance,  the Company  shall adopt such
                           amendments to this  agreement or adopt other policies
                           or  procedures  (including  amendments,  policies and
                           procedures  with  retroactive  effect),  or take such
                           other  actions  as the  Company  deems  necessary  or
                           appropriate  to  (a)  exempt  the   compensation  and
                           benefits  payable  under  this  Agreement  from  Code
                           Section   409A  and/or   preserve  the  intended  tax
                           treatment of the compensation  and benefits  provided
                           with  respect to this  agreement,  or (b) comply with
                           the  requirements  of Code  Section  409A and related
                           Department of Treasury guidance.

ENTIRE AGREEMENT AND
CHOICE OF LAW:             This is the full and complete  agreement  between you
                           and the  Company  of all  terms  of the  arrangements
                           between  the   parties,   supersedes   all   previous
                           agreements  and cannot be  amended  except by written
                           agreement  signed  by both  parties.  If  there  is a
                           dispute over the  interpretation  of this Offer,  its
                           enforceability,  or any claim  arising in  connection
                           with  your  employment,  it  shall  be  governed  and
                           decided under  California law,  without  reference to
                           the law regarding conflicts of law.

                           You represent  that you have had the  opportunity  to
                           consult with an attorney, and have carefully read and
                           understand the scope and effect of this agreement.

To indicate your acceptance of this offer, please sign this letter.

Yours very truly,

/S/ STEPHEN FORTE
--------------------------------------
Stephen Forte, Chief Executive Officer

By accepting  this offer you agree as a  pre-condition  of this offer to execute
Tag-it Pacific's "Employee Non-Disclosure and Invention Agreement" as attached.

Agreed to and accepted:

/S/ JONATHAN BURSTEIN
--------------------------------------
Jonathan Burstein

Date:  March 22, 2006


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