Contract analysis

I. INTRODUCTION AND EXECUTIVE SUMMARY This Confidential Mediation Brief is submitted on behalf of Plaintiff Redstone Gaming Corp. ("RGC") in advance of the mediation session scheduled for December 3–4, 2024, before the Honorable Gerald K. Matsuda (Ret.), at the Westside Mediation Center, 11601 Wilshire Boulevard, Suite 1200, Los Angeles, California 90025. RGC respectfully submits this statement to familiarize the Med

II. THE PARTIES A. Plaintiff Redstone Gaming Corp. Plaintiff Redstone Gaming Corp. is a Nevada corporation with its principal executive offices located at 8800 Crimson Ridge Parkway, Suite 1200, Las Vegas, Nevada 89113. RGC's registered agent is National Statutory Agents, Inc., located at 701 S. Carson Street, Suite 200, Carson City, Nevada 89701. RGC is a diversified gaming and entertainment company that owns and op

1. Grizzly Peak Research LLC. Defendant Grizzly Peak Research LLC is a Delaware limited liability company with its principal office located at 44 Maiden Lane, 7th Floor, San Francisco, California 94108. GPR's registered agent is Pacific Corporate Services LLC, located at 1209 Orange Street, Wilmington, Delaware 19801. GPR describes itself as an independent research firm that publishes short-seller research reports —

2. Grizzly Peak Capital Partners LP. Defendant Grizzly Peak Capital Partners LP is a Delaware limited partnership that operates as a hedge fund affiliated with GPR. GPCP's general partner is Grizzly Peak Capital GP LLC, a Delaware limited liability company whose sole managing member is Tobias Fenchurch. Thus, Fenchurch exercises complete control over both GPR (the research entity that published the defamatory reports

3. Tobias "Toby" Fenchurch (Individual). Defendant Tobias "Toby" Fenchurch is an individual who resides in San Francisco, California. Fenchurch is the Managing Member of GPR and the sole managing member of Grizzly Peak Capital GP LLC, which is the general partner of GPCP. By virtue of these roles, Fenchurch exercises complete and unilateral control over both the research arm (GPR) and the trading arm (GPCP) of the Gr

III. PROCEDURAL HISTORY The following chronology summarizes the key procedural events in this litigation: February 5, 2024 — Original Complaint Filed. RGC filed the original complaint in the Superior Court of California, County of Los Angeles, initiating this action as Case No. 24STCV-01892. The original complaint asserted three causes of action against GPR: (1) Trade Libel under California Civil Code Section 46(3);

IV. THE DEFAMATORY PUBLICATIONS A. Report 1: "House of Cards: Redstone Gaming's Manufactured Earnings" (February 7, 2024) On February 7, 2024, GPR published its first report targeting RGC, a 48-page document titled "House of Cards: Redstone Gaming's Manufactured Earnings." The report was simultaneously posted on grizzlypeakresearch.com and distributed via the @GrizzlyPeakRes social media account to GPR's approximatel

V. THE FALSITY OF THE REPORTS Each of the three categories of allegations contained in the GPR reports has been independently and affirmatively disproven. The evidence of falsity is not based solely on RGC's own statements or denials; rather, it rests on the findings of independent auditors, government regulators, and the sworn testimony of Defendants' own personnel. A. Revenue-Fabrication Allegation — Unfounded GPR'

VI. ACTUAL MALICE A. Legal Standard Because this is a trade libel action involving a publicly traded company and matters of potential public interest, RGC bears the burden of proving actual malice under the standard established in New York Times Co. v. Sullivan, 376 U.S. 254 (1964), and its progeny. Under this standard, actual malice requires proof that the defendant published the defamatory statements with knowledge

1. Financial Motive. GPCP's 680,000-share short position in RDGM, with a notional value of approximately $62.66 million at the time of publication, establishes a direct and powerful financial incentive to publish false negative reports about RGC. Defendants stood to gain — and in fact did gain — millions of dollars from any decline in RDGM's stock price. The estimated short-sale profit of approximately $13.15 million

2. Failure to Verify. The evidence demonstrates that Defendants engaged in a systematic and deliberate failure to verify their most serious allegations before publication. Neither Fenchurch nor Lin contacted RGC management, Pinnacle Audit & Advisory, or the Nevada Gaming Control Board before publishing any of the three reports. These are the three most obvious and readily available sources that any responsible resear

3. Internal Communications Showing Doubt. Perhaps the most damaging evidence of actual malice consists of Defendants' own internal communications, obtained through discovery. Internal Meridian Solutions messages produced in discovery reveal that Ava Lin — the co-author of the reports and the Senior Analyst at GPR — expressed doubts about the related-party allegations before the publication of Report 3. These are not

4. Awareness of Clean Audit Opinions. Fenchurch testified in his deposition that he was aware that Pinnacle Audit & Advisory had issued unqualified opinions on RGC's consolidated financial statements for FY 2021, 2022, and 2023. Unqualified audit opinions represent the gold standard of assurance in the accounting profession, and they are issued only after the auditor has conducted extensive procedures designed to det

VII. DAMAGES A. Plaintiff's Damages Expert — Dr. Elena Vostrikova RGC retained Dr. Elena Vostrikova, Ph.D. (Financial Economics), to serve as its damages expert in this litigation. Dr. Vostrikova is a principal of Meridian Forensic Economics LLC, located at 1901 Avenue of the Stars, Suite 900, Los Angeles, California 90067. She was retained by Calderwood & Harkness on July 1, 2024, and her expert report was exchanged

VIII. DEFENDANTS' FINANCIAL CAPACITY An assessment of Defendants' financial capacity is relevant to evaluating the range of achievable monetary settlements. Based on information obtained through discovery, public filings, and third-party sources, the following is known: Grizzly Peak Research LLC. GPR's estimated cash and receivables as of year-end 2024 are approximately $22 million. While this represents a meaningful

IX. LITIGATION RISK ASSESSMENT FOR DEFENDANTS A. Two Threshold Motions Already Defeated The procedural history of this case provides an unusually clear signal of Defendants' trial risk. Both of Defendants' primary dispositive challenges have been rejected by the court. First, Defendants' anti-SLAPP motion was denied on June 7, 2024. The anti-SLAPP statute provides a powerful procedural mechanism for defendants in def

X. RGC'S SETTLEMENT OBJECTIVES RGC approaches this mediation with clearly defined settlement objectives. RGC seeks a comprehensive resolution that addresses the full scope of the harm caused by Defendants' misconduct, including monetary compensation, corrective public statements, and permanent injunctive relief. A. Monetary Compensation RGC seeks a monetary payment that meaningfully compensates for the damages caused