EXHIBIT 10.20


September 1, 2006


Versatile Entertainment, Inc.
150 West Jefferson
Los Angeles, CA 90007
Attn: Edward C. Houston

Re: Inventory Loan Facility

Dear Edward:

Reference is made to (i) the Factoring  Agreement  between FTC Commercial  Corp.
("FTC") and Versatile Entertainment, Inc. (the "Company") dated October 14, 2004
(as  supplemented  or amended from time to time, the "Factoring  Agreement") and
(ii) the Continuing  Security  Agreement between FTC and the Company of the date
herewith  (as   supplemented  or  amended  from  time  to  time,  the  "Security
Agreement"). The Factoring Agreement, the Security Agreement, and all agreements
now or hereafter  entered into between FTC and the Company  shall be referred to
herein collectively as the "Company Agreements."

Except as otherwise  provided in this letter agreement (this  "Agreement"),  any
capitalized  terms used herein but not defined in this Agreement  shall have the
meanings assigned to such terms in the Factoring Agreement.

For purposes of this Agreement:

         "Inventory"  as used  herein  shall have the  meaning  set forth in the
         Security Agreement.

         "Inventory  Base" means up to fifty  percent  (50.0%) of the value (the
         lesser of cost or market) of the  Company's  raw  material and finished
         goods  Inventory which FTC determines,  in its sole  discretion,  to be
         eligible for  inclusion in the  Inventory  Base.  Without  limiting the
         generality  of the  foregoing,  the  following  Inventory  shall not be
         eligible for inclusion in the Inventory  Base if (i) such  Inventory is
         over one  hundred  eighty  (180)  days  old;  (ii)  such  Inventory  is
         defective  or  damaged;  (iii)  such  Inventory  is not  located at the
         Company's premises at 150 W. Jefferson, Los Angeles,  California 90007;
         (iv) such  Inventory  is  located  at any real  property  leased by the
         Company or at any contract warehouse,  unless such Inventory is subject
         to a collateral access agreement  acceptable to FTC and executed by the
         lessor or  warehouseman,  as the case may be, and unless such Inventory
         is separately  identifiable from the goods of others, if any, stored on
         the premises; (v) the Company does not have good, valid, and marketable
         title to such Inventory;  (vi) such Inventory is not subject to a valid
         and perfected first priority  security  interest in favor of FTC; (vii)
         such  Inventory  consists  of bill and hold goods or goods  acquired on
         consignment or (viii) such Inventory consists of work in process.


<PAGE>


         "Obligations"  means the any and all  obligations  of the Company under
         this Agreement and the Company Agreements.

This  Agreement  shall  confirm our mutual  understanding  and  agreement  that,
subject to the terms and conditions of the Company Agreements, and provided that
no  default  or Event of  Default  under any of the  Company  Agreements  and no
termination  of the Factoring  Agreement has occurred,  FTC may, in its sole and
absolute  discretion,  extend an  inventory  loan  facility to the Company in an
aggregate  principal amount  outstanding at any time not to exceed the lesser of
(a) the  Inventory  Base or (b) up to $1,000,000  MINUS the aggregate  amount of
then outstanding  inventory loans made to (i) Bella Rose, LLC d/b/a William Rast
("BRL")  under the  Inventory  Loan  Facility  between  BRL and FTC of even date
herewith (as amended from time to time, the "BRL Facility  Agreement")  and (ii)
any subsidiaries of BRL (the "BRL Subsidiaries")  which enter into factoring and
inventory loan arrangements with FTC (the " BRL Subsidiaries Agreements")

The interest rate charged on  outstanding  inventory  loans under this Agreement
will be the same rate charged in Section 23 of the Factoring  Agreement and will
be calculated, computed and payable in accordance with the provisions of Section
23.

This Agreement shall terminate,  at FTC's  discretion,  on the date which is the
earlier to occur of: (a) the date on which a default or Event of Default  occurs
under this Agreement,  the Company  Agreements,  the Factoring Agreement between
FTC and BRL dated October 12, 2005 (as amended, the "BRL Factoring  Agreement"),
the BRL Facility Agreement, any of the other agreements between BRL and FTC (the
BRL  Factoring  Agreement,  the  BRL  Facility  Agreement  and  all  such  other
agreements  between BRL and FTC are collectively the "BRL  Agreements"),  or the
BRL Subsidiaries Agreements; or (b) the date on which the Factoring Agreement or
the BRL Factoring  Agreement or any factoring  agreement  between FTC and any of
the BRL  Subsidiaries  is terminated in  accordance  with the notice  provisions
thereof.

In order to induce FTC to extend the  foregoing  inventory  loan facility to the
Company,  the Company agrees that, so long as the Factoring Agreement remains in
effect and any of the Obligations have not been paid and performed in full:

                  i.       The Company shall,  no later than ten (10) days after
                           the  end  of  each  month,  provide  to  FTC:  (a) an
                           Inventory  Certification  or  designation in the form
                           attached  hereto as  "Attachment  A" or in such other
                           form as is  acceptable  to FTC;  (b) an  aging of all
                           Inventory  as of the end of such  month,  in form and
                           substance   acceptable  to  FTC;  and  (c)  a  report
                           detailing the piece goods, the  work-in-process,  the
                           finished goods Inventory  available for sale, and the
                           finished  goods  Inventory sold as of the end of such
                           month, in form and substance acceptable to FTC.

                  ii.      The Company  shall not,  without  FTC's prior written
                           consent  which  shall not be  unreasonably  withheld,
                           sell, lease,  transfer,  assign, abandon or otherwise
                           dispose of any of the  Company's  assets in which FTC
                           has been granted a first priority  security  interest
                           under any of the Company Agreements,  excluding:  (a)
                           assignments  of the  Company's  accounts to FTC under
                           the Factoring Agreement, (b) sales


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<PAGE>


                           of  Inventory  to  the  Company's  customers  in  the
                           ordinary   course  of  the  Company's   business  and
                           operations, (c) licenses of the Company's tradenames,
                           (d) sales or transfers of the Company's tradenames to
                           BRL or the BRL  Subsidiaries or any other  affiliates
                           of the Company which enter into a factoring agreement
                           with  FTC,  and  (e)  the  sale,   lease,   transfer,
                           assignment,   abandonment  or  other  disposition  of
                           Inventory  that is not be eligible  for  inclusion in
                           the  Inventory  Base and/or  Equipment (as defined in
                           the Security  Agreement)  which is not  essential for
                           the  business  and   operations   provided  that  the
                           aggregate fair market value of such Inventory  and/or
                           Equipment does not exceed  $100,000 during any of the
                           Company's fiscal years.

iii.                       The Company  shall not,  without  FTC's prior written
                           consent  which  shall not be  unreasonably  withheld,
                           become a guarantor, a surety, or otherwise liable for
                           the debts or other obligations of any other person or
                           firm  including,  without  limitation,  BRL,  the BRL
                           Subsidiaries or any other  affiliates of the Company,
                           in excess of an aggregate amount $100,000 outstanding
                           at any time,  excluding debts or other obligations of
                           BRL, the BRL  Subsidiaries or any other affiliates of
                           the Company to FTC.

                  iv.      The Company shall,  at the time the BRL  Subsidiaries
                           or any other  affiliates  of the  Company  are formed
                           under  the  laws  of  the  state  in  which  the  BRL
                           Subsidiaries  or any other  affiliates of the Company
                           are  organized,  give FTC written  notice of any such
                           formation.

The inventory loan facility  outlined in this Agreement  shall be subject to the
satisfaction  of  each  of  the  following  conditions  precedent  in  a  manner
satisfactory to FTC:

                  i.       The representations  and warranties  contained herein
                           and in each of the other Company  Agreements shall be
                           true  and  correct  as of the  date of any  inventory
                           loans made under this Agreement.

                  ii.      No default or Event of Default under this  Agreement,
                           the Company Agreements, the BRL Agreements or the BRL
                           Subsidiaries  Agreements shall have occurred or would
                           occur as a result of any  extension  of credit  under
                           the facility described herein.

                  iii.     FTC shall have received  originals of this  Agreement
                           and the Security Agreement,  both of the foregoing to
                           be  dated  as of  the  date  hereof  and  to be  duly
                           executed by the Company,  and originals of Guaranties
                           of the  Obligations,  in the  forms  provided  to the
                           Company by FTC,  both of the foregoing to be dated as
                           of the date hereof and to be duly executed by BRL and
                           People's Liberation, Inc., as applicable.

Nothing  herein  shall be  construed  as limiting or modifying in any way any of
FTC's rights under the Company Agreements,  including without limitation,  FTC's
rights, to be exercised in its sole and absolute discretion, to hold any reserve
FTC deems necessary as security for payment and performance of the  Obligations,
change any advance rates, cease making


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<PAGE>


advances  or  other  financial  accommodations  to  the  Company  and  determine
standards of eligibility.  The  Obligations  shall be secured by a first lien on
and  security  interest in all of the assets of the Company in which the Company
has granted FTC a security interest under the Company Agreements. The failure to
perform any of the terms and  conditions of this  Agreement or the breach of any
of  the  representations  or  warranties   contained  in  this  Agreement  shall
constitute a default or an Event of Default  under the Company  Agreements,  the
BRL  Agreements and the BRL  Subsidiaries  Agreements and the failure to perform
any of the terms and conditions of, or the breach of any of the  representations
or warranties  contained in, the Company  Agreements,  the BRL Agreements or the
BRL Subsidiaries Agreements shall constitute a default under this Agreement.

The foregoing is based upon the financial  condition of the Company as set forth
in its financial  statements  for the three months ended June 30, 2006, as filed
with the Securities and Exchange Commission in its Form 10-QSB. In addition,  by
its signature below, the Company further  represents and warrants that there has
been no material adverse change in the Company's  financial condition since such
statement was prepared.

Please sign below to  acknowledge  that the Company is in agreement  with all of
the foregoing.

Very truly yours,                           ACKNOWLEDGED AND AGREED TO:

FTC COMMERCIAL CORP.                        VERSATILE ENTERTAINMENT, INC.

By: /s/ Ken Wengrod                         By: /s/ Edward C. Houston
    -----------------------------               --------------------------------
Name:  Ken Wengrod                          Name:  Edward C. Houston
Title: President                            Title: President


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