Hello all, For those of you who don't know me, my name is Randall Bills and for the last

se veral years I’ve been serving as Catalyst s Creative Manager. As many of you have undoubtedly noticed, Catalyst has hit a few stumbling blocks under the weight of its dramatic growth over the last several years. As I’ve be come the face of the current situation, I felt you all deserved a look at the cu rrent situation and some details regarding the steps Catalyst is taking to get a ll freelancer payments caught up so we can move forward. If you’ve not yet seen the press release I posted last week to www.catalystgamel abs.com, feel free to take a moment to check it out. I wanted to provide some fu rther details. On Monday March 15th, the Catalyst team delivered our review of the business for 2009 to the pertinent parties. Over the last several years, Catalyst Game Labs has showed a dramatic growth in terms of demand, increased total revenues and st rong sales with an increasing market share in the gaming industry. A huge portio n of the credit for that goes to you, the freelancers. After all, without your p assion and dedication, there would be no books, no games, no Catalyst. That growth has not come without its obstacles, however, and by Q4 of 2009 the C atalyst Managers acknowledged that a co-mingling of funds between the personal a nd business had occurred involving the company’s primary shareholders, the Colem ans. We immediately initiated an audit of the company s historical financial rec ords, and designed a comprehensive plan to get Catalyst s production and payment s back on schedule. This process took some three months of very long days, and w as overseen by our Bookkeeper and Operations Manager, in conjunction with the Co lemans. With the completion of the audit it is clear that the breadth of what occurred w as significant, and would require extensive changes to correct. A detailed plan was outlined for changing the organization of the company, as well as many proce dures to establish a strong financial oversight and series of checks and balance s to ensure this doesn’t happen again in the future. It also included a proposal for how the Colemans will begin paying back the money involved. All of those de tailed findings and action plans were delivered to the pertinent parties on the 15th of March as a key step in our efforts to move forward with full disclosure and transparency. A series of discussions are currently underway on how best to proceed. Last week, while in the process of drafting announcements for the public, as wel l as our vendors (distributors, printers and so on), licensors (i.e., Topps), Ca talyst freelancers, and so on, some information was leaked to the public (and, a s is the way of such things, immediately took on a life of its own). Obviously I was forced to deal with that leaking of information and am just now reaching a point where I can be drafting information to share with our freelancers. There are several critical concerns (in no particular order) that Catalyst is mo ving to address ASAP. 1. Re-organizing and re-structuring to prevent this situation from occurring aga in. 2. Finalizing a plan for how the Colemans can repay the money owed to Catalyst. 3. Ensuring the continuity of license with Topps concerning Shadowrun and Battle Tech. 4. Finding additional sources of revenue in the short term to help start paying down various debts (including monies owed to all of you). 5. Working with Posthuman (Eclipse Phase) and WildFire (CthulhuTech) to determin




e if they still wish to work alongside Catalyst. If they do not, we’ll make ever y effort to spin those games off to those respective companies in a way that wil l best ensure future growth. We’re moving as fast as we can in an attempt to address those primary concerns ( as well as many others). However, this process simply is taking time … and will continue to take time heading into the future. Some of you have already expressed your inability to be patient with Catalyst as we try and find solutions, and I completely understand your frustration. That f rustration was mirrored by several Catalyst full-time employees who felt they si mply could not continue with Catalyst after all that has occurred, including Jen nifer Harding (Office Manager and Bookkeeper), Dave Stansel (Operation Manager) and Adam Jury (Head of Graphic Design), all of whom have formally left the compa ny. We’re already moving to try to find appropriate people to take on their work and responsibilities. Though I wish their decisions might have been different—a s they’re incredibly valuable to what Catalyst has been able to accomplish—I can not fault them for the choices they’ve made. I’ve worked with them in various ca pacities for a long time and consider them good friends. I wish them well and ho pe we’ll have a chance to work together again some time in the future. During all of this, my decision-making process has been called into question. Af ter all, how can I accept what’s happened? Why are the Colemans still involved a t Catalyst if these events occurred? Usually I would have reservations about sha ring such personal thoughts. However, since I’m asking for each of you to decide if you’re willing to allow Catalyst some time to address this situation, I feel it only appropriate to give you my thought process so each of you can make up y our own mind. 1. Catalyst would not be enjoying its current level of success without Loren’s s trategic thinking, or without the connections he’s forged in our industry. We st arted as a small, internet hobby company in 2003 and only officially formed Cata lyst three years ago. Yet as of last Gen Con we “stole the show” and are conside red one of the “up-and-coming big boys.” While Catalyst is far more than a singl e person and is very much a team effort (including all of you), Loren’s contribu tions have been crucial. 2. Would Catalyst survive if the Colemans were no longer involved? Yes, I believ e it would. However, I believe that despite the horrific mistakes made, we will heal faster by keeping Loren involved as part of Catalyst’s ongoing strategic th inking. Last week that belief received a huge chorus of support when we contacte d and/or were contacted by numerous people in the industry, including three tita ns of the industry (I’m not at liberty to share their names to this large of a g roup without asking their permission). Each of those three were given a blunt (a lbeit very brief) synopsis of what occurred, and yet each still pledged their su pport to Loren and me in helping move forward (both in the incredible business s avvy they possess that made them titans, but also in potential revenues to bring to the company). Furthermore, two of these people are intimately familiar with Topps and with their strong advice in our pocket we’ve already approached Topps. Without getting into details we told Topps of our financial issues and made our case that despite those mistakes we have been fantastic in protecting and expan ding the BattleTech and Shadowrun brands and that we are still the best possible stewards of those brands. Topps liked our attitude and appreciated our bluntnes s and we’re setting up a face-to-face meeting in NY, following the GAMA Trade Sh ow this week, to present a plan for how to move forward with securing those allimportant licenses. 3. I believe the best possible way to incentivize someone is to create a recipe for success. Excessively punishing and kicking someone to the curb does not ince ntivize anyone. Keeping someone involved in the process and invested in seeing C atalyst succeed so they can succeed is a far better path for all involved (and o ne I’ve seen succeed time and time again at all levels of business).

4. I’m not the only one that has seen and believes in the points above. If all t he mangers, employees and investors of Catalyst had lined up in opposition to my thoughts and opinions as outlined above, then I very much believe I would’ve ba cked away, feeling that my decisions were compromised. However, while some have left and/or decided they can no longer work with Catalyst, we still have a very strong team of investors, managers, employees and freelancers that supports the overall direction of trying to deal with what’s occurred while finding ways to m ove forward. 5. Considering how long I’ve been involved, and how much blood, sweat and tears I’ve given for Catalyst, I’ve seen a lot of “How can Randall continue to work wi th Loren?” I’ve obviously known the Colemans for a very, very long time and been involved intimately with the company from the day the idea was born 8 years ago . And after reviewing everything and doing some massive soul searching, I’ve mad e a personal decision that this was a terrible, terrible series of mistakes; I b ear my own weight of guilt in this in that I didn’t pay better attention to the various red flags raised over the years that something wasn’t right. More import antly, I see in the Colemans every indication I need to see in order to make for giveness seem appropriate. This falls into a “very personal” category, but it’s key to my point of view and if you’re trying to understand my decisions, it’s im portant you know this. While I may not be the usual image of an LDS church membe r that comes to most people’s mind, my faith is a bedrock; it is the only reason I’ve survived the stress of the last several months and especially last week. B ut if I see a person genuinely sorrowful over a mistake (regardless of the size of those mistakes), and see that same person trying hard to make the mistakes ri ght, I personally have to forgive them. Just as this as been the most difficult personal and professional crises of my career, it has been one of the most diffi cult for my faith, as the rage has had to give way to compassion and forgiveness . Please note, however, that this point is 100% a personal decision, one that de als with whether I can keep a personal relationship with the Colemans. If none o f the other points above existed, then I would’ve asked Loren to completely step away from the company and he and I would’ve solved our issues in private. Howev er, those very points are exactly why I’ve stated I believe the Colemans should still intimately be involved with the company (though a host of checks and balan ce are in the process of being put into place) and why I can set aside my own pe rsonal anger and disappointment to try and move forward in what I believe is the best possible way to save the company and to save the games we all love to work on. I apologize for the length of the email and for the incredibly personal nature o f it, but I felt it warranted. Ultimately each of you will need to ask yourselve s whether you can still trust Catalyst to treat with you fairly and to pay the d ebts owed you, while ensuring that such debts do not pile up for the future. We’ ve laid strong groundwork to do just that over the last week and GTS this week w ill give us the opportunity to further cements those plans. We are also in the process of bringing on a new Bookkeeper who will continue the plan laid out by our previous Bookkeeper to send each of you a thorough audit o f what our books show. This will allow us to ensure we’re not missing any work b y anyone and will help us build a plan for how to start reducing the debt owed t o each of you. However, the original plan called for that to go out by the end o f March, but with the changing of the Bookkeeper that’s going to need to be midd le to end of April. I hope each of you will be willing to bear with us during this crisis and give u s the chance to make this right. However, if you feel you cannot, I completely u nderstand and of course wish you well. More importantly, even if you feel you ca nnot do future work for us, of course we still will work to pay the debts owed t o you. Thank you for your time and patience.

Randall N. Bills Managing Developer Catalyst Game Labs

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