Ann: Equity and Debt Placement Update , page-2

BRISBANE, 16 December 2009 Metal Storm Limited (ASX trading code: MST, OTC Symbol:
MTSXY).
Metal Storm has previously announced the signing of an Equity Subscription Agreement and a
Loan Facility Agreement for an investment of US$35 million by Assure Fast Holdings Limited
BVI (AFHL).
The first tranche of approximately $2.1 million (US$1.9 million) of equity capital (First Tranche)
was initially scheduled to close on 3 November but had been extended subsequently until 7pm
on 10 December. The Board gave a formal notice to AFHL on last Friday requiring AFHL to
remedy its non-compliance with the Subscription Agreement namely, the failure to provide the
First Tranche funding.
That failure was not remedied by the expiry of the notice period and accordingly the Company is
entitled to terminate the Subscription Agreement. Metal Storm reserves its rights with regard to
the breach. The Company considers a successful completion of the Subscription Agreement by
AFHL to be unlikely and it will now pursue the alternative equity opportunity, which is
progressing in accordance with earlier Announcements.
Separately, the Company is pleased to confirm that the Company has now entered into a formal
Subscription Agreement with a private investor, committing to an equity placement of $200,000
by close of business on Friday this week, followed by a further $300,000 on or before 5th
January 2010.