12.          COMMITMENTS

a)          Consulting agreements:

Effective November 1, 2018, the Company entered into consulting agreements (the "Consulting Agreements") with two consultants. The consultants will each be paid $7,500 per month commencing November 1, 2018 and to be increased to $10,000 per month subsequent to the month the Company begins shipping the Byrna® HD product to customers. The term of the contracts with the consultants continue until December 31, 2019. In addition, the Company issued to each consultant 750,000 warrants (the "incentive warrants") to purchase common shares of the Company at a strike price equal to the average trading price of the Company on the OTC QB during the 20 business days preceding such approval. 50% of the incentive warrants vested upon issuance and balance vest upon the completion of the service term. The incentive warrants have a three-year life. See Note 7.

Effective October 29, 2018, the Company entered into a consulting agreement with Lisa Wager ("Wager") pursuant to which she serves as CLO of the Company. By the terms of the consulting agreement, Wager was paid a total of 250,000 common shares for the services calculated at 83,333 common shares per month commencing November 1, 2018 and expiring on January 31, 2019. A total of 416,666 common shares were issued during the year ended November 30, 2019. When this agreement ended, Wager was retained and paid by board resolutions from February 1 through June 30, 2019 and became an employee effective July 1,2019. Her base salary was $15,000/month per board resolution.

The Company executed a consulting agreement effective July 1, 2018 with a corporation owned by Thrasher, then executive chairman. The contract expired on March 31, 2019.

Effective June 1, 2018, the Company entered into a consulting agreement with Ganz pursuant to which Ganz serves as President of the Company. By the terms of the consulting agreement, Ganz was paid $200,000 annually in shares of the Company's common stock for his service, subject to stock exchange approval. The common shares were issued quarterly, ending March 31, 2019. For the Company's 2018 fiscal third and fourth quarters, Ganz was paid 500,000 common shares for each quarter. Based on the consulting agreement, Ganz received 833,333 shares during the year ended November 30, 2019 for services through March 31, 2019. Ganz was paid pursuant to board resolution for April-June 2019 and became an employee effective July 1, 2019 with a base salary of $20,000/month set by board resolution.
 

On April 13, 2018, the Company entered into a Purchase and Sale Agreement (the “Agreement”) with Buys, a resident of South Africa, pursuant to which the Company purchased from Buys a portfolio of registered patent rights and other intellectual property relating to air and/or gas fired long guns or pistols and munitions used with such pistols and long guns, including self-stabilizing shaped or “finned” rounds (the “Portfolio”). As consideration for the Portfolio, the Company (i) paid Buys $100,000, (ii) agreed to pay Buys either $500,000 in cash or $750,000 worth of Company stock within two years (the “Second Payment”) at Buys’ discretion and (iii) agreed to pay Buys certain royalty payments for sales of products by the Company using technology covered by the Portfolio. In addition, the Company agreed to employ Buys as the CTO at a starting salary of $10,000 per month‎ and to issue Buys 1,500,000 options under the Company's 2017 Plan‎ for shares of the Company’s common stock with a strike price of $0.16 and a trigger price of $0.30, $0.50 and $1.00 for each batch of 500,000 options, respectively. The Company’s stock price must close above the trigger price for 20 days in order for the option to be triggered. The options have a seven-year life from grant date and Buys must remain employed by the Company for three years in order for the options to vest. The Agreement further provided that, until the earlier of, April 13, 2020‎ or the date the Second Payment is made, Buys‎ will be paid a royalty of 10% of the Net Sales Price ‎("NSP") of products developed from the Portfolio, which‎ will then be reduced to 4% until the sixth anniversary, 3% until the eighth anniversary, and 2% until the last expiration date of any of the intellectual property in the Portfolio. Until the royalty exceeds $25,000 per year, the Company is committed to a minimum payment of $25,000 per year beginning on the earlier of April 13, 2019‎ or Buys' relocation to Boston. In the event that the Company fails to make the Second Payment, the Portfolio would revert to Buys, but the Company would retain perpetual, irrevocable, exclusive and non-exclusive licenses to use Buys' "tailfin" technology for 40mm rounds, and have and retain a perpetual, irrevocable, non-exclusive license to use the Portfolio related to any and all products that Buys or the Company developed within two years of April 13, 2018. The Company agrees that it will not terminate Buys except for cause prior to the vesting of his options. The agreement was amended subsequent to November 30, 2019. See Note 20 for additional information.

b)          Lease commitments

The Company has the following lease commitments by fiscal year at November 30, 2019:

The above lease commitments reflect annual escalation. During the years ended November 30, 2019 and 2018, the Company recognized rent expense of $60,316 and $36,659 respectively.