It seems they gave away their intent when they clearly show their desire to continue to dilute after the split. There is very little chance barring a huge revelation that your option 2 comes true.
If they had any intent at the first option the RS would come after the promising developments. As i see it this is the most negative bit of news they could have possibly released right outside of closing up shop and dissolving.
Assuming a split of .01 to 1.00 how long do you think this thing stays anywhere near a dollar? it'll be back to the pennies in a heartbeat when the dilution continues.