As they travel towards Winterhaven, the party notices footprints leading up and down the road, many of which were made by small, clawed feet. Small creatures hiding behind the rocks spring into view and begin to move towards the heroes. With a shriek, the small humanoids attack. Scaled and rust-colored, they have reptilian heads and tails. After a tough battle, the party defeats the kobolds who fight to the last. They find a very evil looking medallion in the brush with an octopuslike head.