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An Interview With Darcy Klug, CEO At Redhawk Holdings Corp.

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Below is our interview with Darcy Klug, CEO at Redhawk Holdings Corp:

Q: For those who haven’t heard of it, what is the best way to describe RedHawk Holdings Corp?

A: RedHawk Holdings Corp. is an internationally diversified company which, through its partially and wholly owned subsidiaries, is engaged in sales of cutting edge medical devices, pharmaceuticals, and equipment sales and leasing.

Through its medical products business unit, the Company sells the Sharps and Needle Destruction Device (SANDD™).

SANDD™ are a line of portable needle destruction devices that provide a safer, more economical, environmentally friendly way to dispose of needles. SANDD™ Products are FDA Approved and OSHA Compliant. The complete line of SANDD™ products, including The SANDD mini™, SANDD-HP™ and the SANDD Pro™, are expected to soon be available for virtually all home and commercial applications including hospitals, first responders, as well as a full range of clinics and primary care physicians, dentists, veterinarians, retirement and non-acute healthcare facilities.

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Q: Darcy, can you tell us something more about yourself? How did you get to where you are today?

A: I have been RedHawk’s Interim Chief Executive Officer since November 12, 2018, Chief Financial Officer since February 27, 2015 and was named Chairman of RedHawk’s board of directors on April 20, 2016.

I am the founder and sole owner of Beechwood Properties LLC, a company that focuses on acquiring, renovating and leasing select commercial and residential real estate. I am also the owner of several other investment companies, including Beechwood Capital Corporation and RedHawk Capital, LLC.

From May 2008 until I joined RedHawk, I was engaged in various private investments including real estate and oilfield service companies. Between May 2001 and May 2008, I was Executive Vice President (formerly Chief Financial Officer) of OMNI Energy Services Corp., a NASDAQ listed oilfield service company.

From 1987 through May 2001, I was engaged in several private investments in the oilfield service, medical litigation support and manufacturing industries. Between 1983 and 1987, I held various positions with a private oil and gas fabrication company, including the position of Chief Operating Officer and Chief Financial Officer.

Prior to 1983, I held various positions with Galveston-Houston Company, a New York Stock Exchange listed manufacturer of oil and gas equipment and held the position of Chief Financial Officer of First Matagorda Corporation, a NASDAQ listed oil and gas exploration company and affiliate of Galveston-Houston Company. Between 1973 and 1979, I was a member of the audit staff of PricewaterhouseCoopers (formerly Coopers & Lybrand). I am a 1973 accounting graduate of Louisiana State University and, in 1974, I was admitted as a member of the Louisiana State Board of Certified Public Accountants, the Texas State Board of Certified Public Accountants and the American Institute of Certified Public Accountants.

Q: What is the biggest challenge you’ve faced in your career and how did you overcome it?

A: While not my biggest investment transaction, there is one transaction I often refer to as being what I consider to be one of my best. And I believe it demonstrates how I approach investment opportunities and work through challenges.

Two individuals brought me an investment opportunity for the purchase a private prison located in South Texas. One individual had a law enforcement background and the second was providing the necessary seed capital for completing the transaction (collectively “the Buyers”). The prison was owned by three (3) other unrelated individuals (collectively “the Owners”).

The Owners were involved in protracted litigation against each other and, as a result, the prison was not operating and had been closed for several years.

The project started out very simple – my instructions were to meet with the Owners, help resolve the litigation, put together a transaction to purchase the prison at a price less than $3 mil that would allow the Buyers to save as much capital as possible for renovations and start-up costs. For completing the transaction, I negotiated success fee plus a carried interest in the project going forward.

After several months of much invested capital (time and $), we had an agreement with the Owners. First, I helped resolve the protracted litigation with the Owners agreeing to dismiss the protracted litigation at closing. Second, I negotiated a $1.95 mil purchase price for the prison, with most importantly, 100% Owner Financing.

SUCCESS (or so I thought). Upon informing the Buyers of my success with the Owners, I was notified by the Buyers that the financial partner was no longer capable providing the seed capital necessary to complete the transaction even with 100% Owner Financing.

So, I initiated to “PLAN B.”

During the due diligence, I was introduced to other owners of private prison in South Texas. During this period, I also learned that this target prison was the only private prison in the South Texas area NOT owned by one particular Texas-based company. I immediately approach this group and approximately 30 days later we closed the purchase/sale of the prison on the same day.

At 11 a.m. on a Friday morning, we purchased the prison from the Owners for $1.95 mil (100% Owner Financing). At 2 p.m. that same day, we sold the prison to the Texas-based company for $3.45 mil that included assumption of the $1.95 mil (100% Owner Financing) PLUS a $1 million check paid to us at closing PLUS a 5-year, $500,000 royalty based on prison incarcerations

Q: RedHawk Holdings Corp has a subsidiary, Sharps and Needle Deconstruction Devices (SANDD™), can you tell us more about this cutting edge technology?

A: The SANDD technology is owneed by our wholly-owned subsidiary, RedHawk Medical Products & Services LLC

The mission of the SANDD line of products is to change both the way patients and physicians safely, economically and environmentally friendly dispose of their needles thus eliminating the risk of needle stick injuries in the future.

Utilizing a plasma arc, the SANDD mini™ heats the needle to over 2500 degrees Celsius in less than three seconds, eliminating both the needle and all known blood-borne pathogens in the process. The device uses a rechargeable battery to deliver the plasma arc to the needle. A fully charged battery will disintegrate 200 needles before needing to be recharged.

The SANDD mini™ is designed to be used with hypodermic needles attached to pre-filled syringes or diabetic pen injection devices that measure less than 1 inch in length and between 27-32 gauges in diameter.

The device produces little to no waste leaving the syringe to be disposed of in general waste as opposed to the need for the use of a sharps box. The change in this route of waste disposal is projected to offer healthcare providers significant budgetary savings and ease of disposal in home healthcare settings.

The SANDD Pro™ operates similarly as the SANDD mini™ but with a bit different patented electrical technology allowing the SANDD Pro™ To incinerate needles 21 gauge and higher, up to 8” in length.

Q: How is SANDD™ helping save lives?

A: It is estimated that there are 1 million needlestick injuries annually in hospitals and clinics. Hospitals and clinics alone only represent approximately 40% of the heathcare industry.

The Government Accounting Office estimates that workers’ compensation costs resulting from needlestick injuries in hospitals and clinics alone, approximates $500 mil annually.

Proper use of the SANDD medical devices prevent needlestick injuries while killing all blood-borne pathogens that could otherwise result in the transmission of disease through needlestick injuries.

Q: Why should these devices be in every hospital, nurse’s office and homeless shelter throughout the country?

A: As I mentioned, proper use of SANDD saves lives, saves tax payer dollars and saves the environment.

Q: SANDD™ launched the SANDD mini–First Responder™device earlier this month, how is this device helping protect law enforcement agencies?

A: Unfortunately needlestick injuries are also a hazard for law enforcement. A single needlestick not only causes mental and emotional stress for the First Responder and his/her family, its costs taxpayers as well.

Many folks are unaware that workers compensation costs for most First Responder agencies are self-funded with taxpayer dollars. Annual workers compensation costs for a single needlestick injury to a First Responder can easily top $30,000, even if the First Responder doesn’t contract a disease. If the First Responder unfortunately does contract a disease, workers compensation costs and easily exceed $1 million in tax dollars.

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Q: Can you give us any hints as to what else we might expect to see from RedHawk Holdings Corp this year?

A: We like investing in cutting edge technologies. One we hope to begin focus on in the next 12 months is in our “Centri Controlled Entry System,” a unique, closed cabinet, nominal dose transmission full-body x-ray scanner that we believe may have both security and medical applications.

Q: SANDD™ recently announced a partnership with famed celebrity physician, Dr. Drew Pinsky, or “Dr. Drew” and American actor, Derek Theler. What are your hopes with these partnerships?

A: We couldn’t be more proud to have these two impressively bright gentlemen on our team. Both Dr. Drew and Derek are able to bring their unique expertise and background in order to raise awareness towards the benefits of safe needle disposal, as well as the possible threats without companies like SANDD™.

Dr. Drew has been tirelessly working in the trenches, battling the opioid crisis and the homeless epidemic throughout the entirety of his career in medicine. Addicts and folks living on the streets, or in shelters, are some of the most vulnerable populations when it comes to potential needle stick injury. By having someone like Dr. Drew, a trusted name in health and wellness, talk to folks about the possible spread of disease and the urgency to do something about this growing issue, is absolutely incredible and we are honored to be working with him.

Additionally, we’re thrilled to have someone of Derek’s stature as a spokesperson to represent the SANND mini™. As a diabetic since childhood, Derek knows firsthand how important it is to correctly dispose of the hypodermic needles he requires to control his disease.

We believe that these needle disintegration devices are revolutionary in their effectiveness and portability and belong in many varied settings to ensure safety from this hazardous waste, including at home use for diabetics.

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