Contract analysis

I. EXECUTIVE SUMMARY This memorandum provides Redstone Gaming Corp. ("RGC" or the "Company") with a preliminary assessment of the claims arising from the publication by Grizzly Peak Research LLC ("GPR") of a report titled "House of Cards: Redstone Gaming's Manufactured Earnings" ("Report 1"), published on February 7, 2024. The purpose of this assessment is to evaluate the strength and viability of the causes of actio

1. Redstone Gaming Corp. Redstone Gaming Corp. is a Nevada corporation publicly traded on the Nasdaq Stock Market under the ticker symbol RDGM. The Company is headquartered at 8800 Crimson Ridge Parkway, Suite 1200, Las Vegas, Nevada 89113. RGC owns and operates eleven casino-resort properties across three states — Nevada, New Jersey, and Mississippi — and is a significant participant in the regulated gaming industry

2. Grizzly Peak Research LLC Grizzly Peak Research LLC is a Delaware limited liability company with its principal office at 44 Maiden Lane, 7th Floor, San Francisco, California 94108. GPR publishes short-seller research reports — that is, reports designed to identify purported weaknesses, accounting irregularities, or fraud at publicly traded companies in which GPR and its affiliates hold short positions. GPR distrib

3. Grizzly Peak Capital Partners LP Grizzly Peak Capital Partners LP ("GPCP") is a Delaware limited partnership and an affiliated hedge fund of GPR with estimated assets under management of approximately $185 million. GPCP's general partner is Grizzly Peak Capital GP LLC, whose sole managing member is Tobias Fenchurch. GPCP is the entity that held the short position in RDGM at the time of Report 1's publication. As d

III. ANALYSIS OF CLAIMS A. Trade Libel (Cal. Civ. Code § 46(3))

1. Elements of the Claim Under California law, a claim for trade libel (also referred to as injurious falsehood or disparagement of a business) requires the plaintiff to establish: (1) a publication of a false statement of fact; (2) that is disparaging to the plaintiff's business, products, or services; (3) publication of the statement to one or more third parties; (4) that the defendant published the statement with

2. Application to the Facts Falsity. Report 1 alleges that RGC fabricated approximately $410 million in fiscal year 2023 revenue through fictitious intercompany transactions. This allegation is directly contradicted by Pinnacle Audit & Advisory LLP's clean audit opinions for fiscal years 2021 through 2023. Pinnacle's engagement partner, Walter Ng, CPA, conducted the audit in accordance with generally accepted auditin

3. Assessment. The trade libel claim is RGC's strongest cause of action and the primary vehicle for recovery. The combination of audited financial statements contradicting GPR's allegations, GPR's significant short position and profit motive, GPR's failure to contact RGC or its auditor before publication, and the magnitude of the resulting financial harm presents a compelling case for liability and substantial damage

1. Elements of the Claim Under California law, a claim for intentional interference with prospective economic advantage requires the plaintiff to establish: (1) the existence of an economic relationship between the plaintiff and a third party, with the probability of future economic benefit to the plaintiff; (2) the defendant's knowledge of this relationship; (3) intentional acts by the defendant designed to disrupt

2. Application to the Facts Economic relationships. RGC maintains extensive and ongoing economic relationships with a wide range of third parties, including institutional investors, retail shareholders, sell-side analysts, lending counterparties, gaming regulators (whose continued approval is necessary for the maintenance of RGC's gaming licenses), business partners, content-distribution partners, and casino customer

3. Assessment. The intentional-interference claim is viable and complements the trade libel cause of action. It provides an additional theory of liability and may be particularly useful in capturing categories of harm — such as disruption of business negotiations and damage to regulatory relationships — that are not neatly captured by the trade libel claim alone. C. Unfair Business Practices (Cal. Bus. & Prof. Code §

1. Elements of the Claim California Business and Professions Code § 17200 prohibits any "unlawful, unfair, or fraudulent business act or practice." The statute provides for injunctive relief and restitution (including disgorgement of ill-gotten gains) and operates as a broad, flexible remedy designed to capture business conduct that falls outside the reach of more specific statutory prohibitions.

2. Application to the Facts GPR's publication of materially false reports while holding a large short position and profiting from the resulting stock-price decline constitutes an unfair business practice within the meaning of § 17200 under each of the statute's three prongs: (a) Unlawful prong. GPR's conduct is "unlawful" insofar as it constitutes trade libel actionable under California Civil Code § 46(3). The unlawf

3. Assessment. The § 17200 claim is viable and provides remedies — particularly injunctive relief and disgorgement — that are not available through the trade libel and interference claims alone. It adds meaningful strategic value to the overall litigation. D. Potential Additional Claims (for Amended Complaint) As the litigation develops and additional evidence emerges — particularly if GPR publishes additional report

IV. ANTI-SLAPP RISK ASSESSMENT A. Overview of Cal. Code Civ. Proc. § 425.16 California's anti-SLAPP statute, codified at Code of Civil Procedure § 425.16, provides a mechanism for the early dismissal of claims that arise from a defendant's exercise of the constitutional rights of free speech or petition in connection with a public issue. The statute was enacted to protect defendants from meritless lawsuits designed t

1. Begin assembling declarations and evidence for the anti-SLAPP opposition immediately, well in advance of GPR's anticipated motion.

2. Obtain a declaration from Walter Ng, CPA, the engagement partner at Pinnacle Audit & Advisory LLP, confirming the clean audit opinions for fiscal years 2021 through 2023 and describing the scope and rigor of Pinnacle's audit procedures.

3. Obtain a declaration from CFO Priya Ramaswaran directly rebutting the revenue-fabrication allegation, explaining the nature and legitimacy of the intercompany transactions identified by GPR, and confirming the accuracy of RGC's reported financial results.

4. Obtain a declaration from Janelle Hu, VP of Investor Relations, documenting the market impact of Report 1, including the stock-price decline, elevated shareholder inquiries, and disruption to investor-relations activities.

5. Prepare a comprehensive legal brief addressing both prongs of the anti-SLAPP analysis, with particular emphasis on the commercial-speech exception. If the anti-SLAPP motion is denied, it will constitute a significant strategic victory for RGC. A denial at this stage would confirm the viability of RGC's claims, open the door to full discovery — including discovery into GPR's trading activity, communications, and re

V. DAMAGES ASSESSMENT AND EXPERT ENGAGEMENT A. Preliminary Damages Framework RGC's damages from Report 1 are substantial and continue to develop. We organize the preliminary damages framework as follows: Market-Capitalization Loss. The single-day decline in RGC's market capitalization following Report 1 was approximately $573 million. This figure represents the aggregate loss experienced by RGC's shareholders as a re

VI. IMMEDIATE ACTION ITEMS AND RECOMMENDATIONS A. Litigation Posture We recommend an aggressive litigation posture. The strength of RGC's evidence — including clean audited financial statements from an independent accounting firm, extensive regulatory oversight by multiple gaming commissions, and the absence of any prior regulatory inquiry or adverse finding — combined with GPR's financial motive in the form of a 680

1. Monitor grizzlypeakresearch.com and the @GrizzlyPeakRes social media account on a daily basis for new publications or previews of forthcoming reports.

2. If additional reports are published, assess whether the content and circumstances warrant seeking emergency injunctive relief, including a temporary restraining order ("TRO") and/or a preliminary injunction. The threshold for such relief is high — particularly given First Amendment considerations — but may be met if additional reports demonstrate a pattern of deliberately false publications designed to manipulate

3. If additional defendants should be added — including GPCP and Tobias Fenchurch individually — prepare a First Amended Complaint promptly. We recommend having a draft First Amended Complaint substantially prepared in advance so that it can be filed on short notice if circumstances warrant. C. Regulatory Coordination The publication of Report 1 may trigger inquiries from one or more regulatory bodies, including the

1. Coordinate with RGC management to identify and respond promptly to any inquiries from gaming regulators or the SEC triggered by GPR's publications.

2. Consider proactive engagement with specialized Nevada gaming regulatory counsel. We recommend Hargrove & Sato LLP, 300 South 4th Street, Suite 1800, Las Vegas, Nevada 89101, as experienced gaming regulatory practitioners who can assist RGC in navigating any regulatory inquiries and, where appropriate, in obtaining confirmatory statements or clearances from the Nevada Gaming Control Board.

3. Consider requesting that the Nevada Gaming Control Board conduct an independent audit of RGC's random-number-generator systems used in its electronic gaming platforms. Although this request goes beyond the specific allegations in Report 1, our intelligence suggests that GPR's anticipated Report 2 may target RGC's RNG software. A proactive, voluntary request for an independent regulatory audit would serve to preemp

1. Review the specific intercompany transactions identified by GPR in Report 1 and confirm their legitimacy, business purpose, and proper accounting treatment.

2. Coordinate with Pinnacle Audit & Advisory LLP (Walter Ng, CPA) for a supplemental forensic audit engagement focused on the matters raised in Report 1.

3. Interview relevant personnel, including finance, accounting, and operations staff, to gather information that may be useful in rebutting GPR's allegations and in preparing declarations for the anti-SLAPP opposition.

4. Ensure that the results of the internal review are communicated to the litigation team at Calderwood & Harkness on a privileged basis. F. Expert Retention As discussed in Section V.B above, we recommend the following expert retentions:

1. Dr. Elena Vostrikova / Meridian Forensic Economics LLC — for event-study analysis and damages quantification. A formal retention letter should be sent within 48 hours.

2. Pinnacle Audit & Advisory LLP — for a supplemental forensic audit engagement addressing the specific allegations in Report 1. This engagement should be coordinated through RGC's General Counsel's office and should be structured to maximize both its evidentiary value and its protection under the attorney-client privilege and work-product doctrine. G. Public Communications All public statements by RGC regarding Repo

1. Confirm that the litigation-hold memorandum has been disseminated to all key custodians, including Marcus J. Calloway (CEO), Priya Ramaswaran (CFO), Janelle Hu (VP, Investor Relations), and any other personnel likely to possess documents or communications relevant to the matters raised by GPR.

2. Ensure preservation of all communications — including emails, text messages, instant messages, voicemails, and other electronic records — regarding GPR, Tobias Fenchurch, Ava Lin, Report 1, and any anticipated future reports.

3. Ensure preservation of all communications regarding Vermilion Holdings LLC, an entity referenced by GPR in Report 1 that may feature prominently in future reports.

4. Confirm that any automatic-deletion policies have been suspended for all key custodians and relevant data sources.

5. Retain a copy of the litigation-hold memorandum and all distribution confirmations for the litigation file.

VII. ENGAGEMENT TEAM AND NEXT STEPS Calderwood & Harkness's engagement team for this matter consists of the following attorneys: The fee arrangement for this engagement is a modified hourly structure at 85% of Calderwood & Harkness's standard rates during the pendency of the litigation. In addition, a 15% success premium will be applied to aggregate fees upon the successful conclusion of the matter, whether by settle

VIII. CONCLUSION Based on our preliminary assessment, Redstone Gaming Corp. has strong claims against Grizzly Peak Research LLC for trade libel, intentional interference with prospective economic advantage, and unfair business practices under California Business and Professions Code § 17200. The strength of RGC's evidence — anchored by clean audit opinions from Pinnacle Audit & Advisory LLP and buttressed by the exte

1. Effect service of the complaint on GPR and its registered agent.

2. Monitor GPR's website and social media accounts daily for additional reports.

3. Retain Dr. Elena Vostrikova at Meridian Forensic Economics LLC for event-study and damages analysis.

4. Coordinate with Pinnacle Audit & Advisory LLP (Walter Ng, CPA) for supplemental forensic audit.

5. Engage Nevada gaming regulatory counsel (Hargrove & Sato LLP) for proactive regulatory coordination.

6. Issue a measured public response through Crestline Equity Partners Group Inc. (Simone Arecchi).

7. Prepare declarations and evidence for the anticipated anti-SLAPP motion.

8. Confirm dissemination and compliance with the litigation-hold memorandum.

9. Assess the advisability of adding GPCP and Tobias Fenchurch as defendants in a First Amended Complaint. Calderwood & Harkness is fully engaged on this matter and recommends proceeding with maximum vigor. We are available to discuss this memorandum and the recommended course of action at your earliest convenience. Respectfully submitted, CALDERWOOD & HARKNESS LLP By: ________ Francesca Morano, Partner 333 South Gra