They have to be issued first. If they were issued in connection with the conversion of a legitimately aged note, then they would be free trading. But if, say, a new financier arrived on the scene, and a note was issued to him, he'd be unable to convert and sell immediately, because the stock would be restricted for one year. Technically, the company would be expected to raise the a/s to make enough stock available for conversion at that time.
But most Pinks don't raise the authorized till they have to, even when they should.
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