Metal Storm Limited : Appendix 3B

Appendix 3B

New issue announcement

Appendix 3B

300Rule 2.7, 3.10.3, 3.10.4, 3.10.5

New issue announcement, application for quotation of additional securities and agreement

Information or documents not available now must be given to ASX as soon as available. Information and documents given to ASX become ASX's property and may be made public.

Introduced 1/7/96. Origin: Appendix 5. Amended 1/7/98, 1/9/99, 1/7/2000, 30/9/2001, 11/3/2002, 1/1/2003, 24/10/2005.

Name of entity

Metal Storm Limited

ABN

99 064 270 006

We (the entity) give ASX the following information.

Part 1 - All issues

You must complete the relevant sections (attach sheets if there is not enough space).

1 +Class of +securities issued or to
be issued Ordinary Shares
2 Number of +securities issued or to be issued (if known) or maximum number which may be issued
37,500,000 ordinary shares issued on conversion of 250,000 secured convertible notes.
3 Principal terms of the +securities (e.g. if options, exercise price and expiry date; if partly paid

+securities, the amount outstanding and due dates for

payment; if +convertible securities, the conversion price
and dates for conversion)
Fully paid ordinary shares that rank equally in all respects with existing ordinary shares.

+ See chapter 19 for defined terms.

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Appendix 3B

New issue announcement
4 Do the +securities rank equally in all respects from the date of allotment with an existing +class of quoted +securities?
If the additional securities do not rank equally, please state:
• the date from which they do
• the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment
• the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment
Yes
5 Issue price or consideration
$0.0009 per share, which is 90% of the average of the five lowest daily VWAPs during the 20 business days immediately preceding the conversion date, with the resultant number being rounded down to four decimal places (calculated in accordance with the convertible note terms).
6 Purpose of the issue
(If issued as consideration for the acquisition of assets, clearly identify those assets)
Shares issued in accordance with the terms and conditions of the Convertible Notes issued in September 2006.
7 Dates of entering +securities into uncertificated holdings or
despatch of certificates 27 April 2012
8 Number and +class of all

+securities quoted on ASX (including the securities in clause 2 if applicable)

+ See chapter 19 for defined terms.

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New issue announcement
9 Number and +class of all

+securities not quoted on ASX (including the securities in

clause 2 if applicable)
10 Dividend policy (in the case of a trust, distribution policy) on the increased capital (interests)

N/A

Part 2 - Bonus issue or pro rata issue

11 Is security holder approval required?
12 Is the issue renounceable or non-renounceable?
13 Ratio in which the +securities will be offered
14 +Class of +securities to which the offer relates
15 +Record date to determine entitlements
16 Will holdings on different registers (or sub-registers) be aggregated for calculating entitlements?
17 Policy for deciding entitlements in relation to fractions
18 Names of countries in which the entity has +security holders who will not be sent new issue documents

Note: Security holders must be told how their entitlements are to be dealt with.

Cross reference: rule 7.7.

19 Closing date for receipt of acceptances or renunciations
20 Names of any underwriters

+ See chapter 19 for defined terms.

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New issue announcement
21 Amount of any underwriting fee or commission
22 Names of any brokers to the issue
23 Fee or commission payable to the broker to the issue
24 Amount of any handling fee payable to brokers who lodge acceptances or renunciations on behalf of +security holders
25 If the issue is contingent on

+security holders' approval, the date of the meeting

26 Date entitlement and acceptance form and prospectus or Product Disclosure Statement will be sent to persons entitled
27 If the entity has issued options, and the terms entitle option holders to participate on exercise, the date on which notices will be sent to option holders
28 Date rights trading will begin (if applicable)
29 Date rights trading will end (if applicable)
30 How do +security holders sell their entitlements in full through a broker?
31 How do +security holders sell part of their entitlements through a broker and accept for the balance?
32 How do +security holders dispose of their entitlements (except by sale through a broker)?
33 +Despatch date

+ See chapter 19 for defined terms.

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New issue announcement

Part 3 - Quotation of securities

You need only complete this section if you are applying for quotation of securities

34 Type of securities
(tick one)
(a) Securities described in Part 1

(b) All other securities

Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid, employee incentive share securities when restriction ends, securities issued on expiry or conversion of convertible securities

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

Tick to indicate you are providing the information or documents

35 If the +securities are +equity securities, the names of the 20 largest holders of the additional +securities, and the number and percentage of additional

+securities held by those holders

36 If the +securities are +equity securities, a distribution schedule of the additional

+securities setting out the number of holders in the categories

1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
37 A copy of any trust deed for the additional +securities

+ See chapter 19 for defined terms.

24/10/2005 Appendix 3B - Page 5

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New issue announcement

Entities that have ticked box 34(b)

38 Number of securities for which

+quotation is sought

39 Class of +securities for which quotation is sought
40 Do the +securities rank equally in all respects from the date of allotment with an existing +class of quoted +securities?
If the additional securities do not rank equally, please state:
• the date from which they do
• the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment
• the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment
41 Reason for request for quotation now

Example: In the case of restricted securities, end of restriction period

(if issued upon conversion of another security, clearly identify that other security)
42 Number and +class of all

+securities quoted on ASX (including the securities in clause

38)

+ See chapter 19 for defined terms.

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New issue announcement

Quotation agreement

1 +Quotation of our additional +securities is in ASX's absolute discretion. ASX may quote the +securities on any conditions it decides.

2 We warrant the following to ASX.

• The issue of the +securities to be quoted complies with the law and is not for an illegal purpose.

• There is no reason why those +securities should not be granted +quotation.

• An offer of the +securities for sale within 12 months after their issue will not require disclosure under section 707(3) or section 1012C(6) of the Corporations Act.

Note: An entity may need to obtain appropriate warranties from subscribers for the securities in order to be able to give this warranty

• Section 724 or section 1016E of the Corporations Act does not apply to any applications received by us in relation to any +securities to be quoted and that no-one has any right to return any +securities to be quoted under sections

737, 738 or 1016F of the Corporations Act at the time that we request that the

+securities be quoted.

• If we are a trust, we warrant that no person has the right to return the

+securities to be quoted under section 1019B of the Corporations Act at the time that we request that the +securities be quoted.

3 We will indemnify ASX to the fullest extent permitted by law in respect of any claim, action or expense arising from or connected with any breach of the warranties in this agreement.

4 We give ASX the information and documents required by this form. If any information or document not available now, will give it to ASX before +quotation of the +securities begins. We acknowledge that ASX is relying on the information and documents. We warrant that they are (will be) true and complete.

Sign here: ...................................................... Date: 27/04/2012 (Director / Company Secretary)

Print name: Brett Farmer

== == == == ==

+ See chapter 19 for defined terms.

24/10/2005 Appendix 3B - Page 7

METAL STORM LIMITED

ABN 99 064 270 006

Unquoted Options

The outstanding balance at 26 April 2012 is represented by:

Expiry Date	Exercise Price	Number of Options
30-Jun-12	$0.400	193,750
24-Sep-12	$0.001	35,215,403
30-Sep-12	$0.400	193,750
31-Dec-12	$0.400	168,750
11-Feb-13	$0.035	8,000,000
31-Mar-13	$0.400	168,750
16-Apr-13	$0.035	4,268,811
30-Jun-13	$0.400	168,750
12-Sept -13	$0.001	2,700,000
13-Sep-13	$0.015	1,351,116,999
		1,402,194,963