Actually, they are giving the option to get a preferred share (face value of $10) for 1000 pre-split common shares. After 1 year, you get ($11/share price) common shares. If you have 1,000,000 shares and the stock trades at 0.002 pre-split, you get 1000 preferred shares. 6 months later you get a dividend. One year later you get another dividend and the right to convert you 1000 preferred shares into ($11,000/share market price) common shares.
If post split common shares remain at 0.002*800 (or $1.60) for the whole year, your new 6876 common shares will have a market value of $11,000. Still more that today's value of $2000 (450% higher).
Since the conversion will obviously occur after the 800-1 RS, the ratio will be re-adjusted to have the same effect.
Since your 1,000,000 pre-split shares are supposed to give you 1000 preferred shares, your 1,250 post-split shares should still give you 1000 preferred shares. So the conversion rate will be:
1.25:1 for conversion of post-split common shares to preferred shares.