update on asof convertible security

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Update on ASOF convertible security

Brisbane, Australia – 12 December 2011: Metal Storm Limited
.
As announced to ASX in October 2011, Metal Storm entered into an agreement with The
Lind Partners, LLC, as manager of the Australia Special Opportunity Fund LP (ASOF), under
which:
• ASOF provided loans to the Company in various tranches totalling A$700,000; and
• subject to obtaining Shareholder approval and the satisfaction or waiver of various
other conditions, ASOF agreed to have the A$700,000 in loans, together with a
further payment of A$200,000 cash (i.e. a total of A$900,000), applied as
consideration for the issue of a new type of convertible security to ASOF (the ASOF
Convertible Security),
(Convertible Security Agreement).
Metal Storm obtained shareholder approval on 8 December 2011 to issue the ASOF
Convertible Security to ASOF.
Metal Storm has received correspondence from ASOF under which ASOF has alleged that
the Company has breached the Convertible Security Agreement and has reserved its rights
in relation to the alleged breach.
Metal Storm is currently taking legal advice on this issue.
The Company is also in negotiations with ASOF to resolve the matter.
Metal Storm will provide a further update to the market as required in due course.