Rule 701 exempts certain sales of securities made to compensate employees, consultants and advisors. This exemption is not available to Exchange Act reporting companies. A company can sell at least $1 million of securities under this exemption, regardless of its size. A company can sell even more if it satisfies certain formulas based on its assets or on the number of its outstanding securities. If a company sells more than $5 million in securities in a 12-month period, it is required to provide certain financial and other disclosure to the persons that received securities in that period. Securities issued under Rule 701 are “restricted securities” and may not be freely traded unless the securities are registered or the holders can rely on an exemption.