Production of the Colt Pocket Hammerless (aka the Model M) pretty much died at the end of World War Two. Military contracts ended, and the civilian market was quite weak – Colt shipped just 132 of the .32 caliber guns between 1946 and 1953, and only a handful of .380s at the same time. Several problems faced Colt in restarting production; for one thing, their tooling was pretty worn out after nearly 50 years of use, and was really in need of a substantial (and expensive) overhaul. In addition, many of the long-term experienced workers who know the gun inside and out had retired at the end of the war.
Colt did attempt to design a new model of the gun to reinvigorate commercial interest, and this is one of the three prototypes of that new model that were made. It retained the core mechanical elements of the Pocket Hammerless (fixed barrel, simple blowback), but added many external elements from the 1911, such as a short grip safety, larger thumb safety, separate slide release, magazine release button, and substantially larger sights. Ultimately the project never reached production status, and Colt’s next commercial .380 would be the Pony, a rebranded Star Model DK (which was also not particularly successful).