Under securities laws shares cannot be sold unless they have been qualified under a prospectus, or an exemption from the prospectus requirement is available to the the purchaser. This clause has the purchaser agree that they understand that there has been no prospectus and that the shares cannot be resold unless there is a further exemption, or they are qualified by the corporation under a prospectus. The clause has the purchaser acknowledge that they have been advised about the applicable securities laws, which restrict sales of the shares.