“Smart Gun” Manufacturer Undergoes Corporate Restructuring, Top Designer Leaves

   05.28.15

Last week Armatix, the German technology firm behind the controversial iP1 pistol, indicated that it has entered Chapter 11-style restructuring proceedings. The announcement came on the heels of another blow to the company—its head of technical operations and veteran firearms designer Ernst Mauch quit in late April. According to Fortune, Muach lent credibility to to Armatix as an arms manufacturer due to his 30 years of experience with Heckler & Koch.

“I am a man making no compromises. I want to walk through my life with a straight and honest backbone,” Mauch told The Washington Post, giving no reasons for his abrupt departure.

Armatix is a relative newcomer to the firearms industry and is best known for its work in building “smart gun” technology—firearms that use integrated RFID chips to recognize their users. The company’s flagship product, a semiautomatic pistol chambered in .22 LR called the iP1, can only be fired when in range of a special watch that is sold along with the firearm. Once the watch moves more than 10 inches away from the gun, it can no longer fire. While the product was ostensibly designed and marketed for self defense, Armatix found itself the target of criticism when it attempted to introduce the iP1 to the United States. Many gun owners did not trust the gun to be reliable, while others opposed it due to implications that the technology could have for gun control. To date, the company’s attempts to sell the firearm in the United States have been mostly unsuccessful.

A recent statement from Armatix stated that the company is not in the process of an insolvency proceeding, merely a corporate restructuring.

“Armatix will continue operations and does not anticipate any changes to its majority shareholders,” said the statement.

Yet the signs point to trouble for the German gun maker. Armatix recently pulled out of a major smart gun technology fair in New York—despite being the key presenter—because the company’s funds were frozen and it could not pay for travel expenses. Publicly filed financial statements also showed that the company has recorded at least 14 million euros in losses since 2011.

When Armatix attempted to sell the iP1 in American gun stores, overwhelming criticism of the gun forced many retailers to reconsider carrying the product. One of them was the Oak Tree Gun Club in California, which courted national attention last year when the club started promoting the pistol. Backlash from both club members and the gun-owning community quickly resulted in a clarification from the club’s owners that the pistol was never for sale.

The opposition to the iP1 was due in part to a controversial law in New Jersey that requires all guns sold in the state to be updated with smart gun features as soon as the technology was deemed reliable. Many gun owners worry that with the release of the iP1, similar laws in other states would be passed as well.

Armatix and its supporters argue that smart gun technology only serves to make gun use safer. The company is currently developing a larger, more advanced version of the iP1 called the iP9. That model, chambered in 9x19mm, is being designed for police and military use.

You can see a demonstration of how the iP1 handgun works below. The video is in German.

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