Conversion is not delayed but for it to be free trading it is delayed 12 months. Also they are subject to the 1% rule so it is not like they can just unload all the shares the way Rainmaker is alluding to.
SEC RULE:
If you are an affiliate, the number of equity securities you may sell during any three-month period cannot exceed the greater of 1% of the outstanding shares of the same class being sold, or if the class is listed on a stock exchange or quoted on Nasdaq, the greater of 1% or the average reported weekly trading volume during the four weeks preceding the filing a notice of sale on Form 144. Over-the-counter stocks, including those quoted on the OTC Bulletin Board and the Pink Sheets, can only be sold using the 1% measurement.