One day, Stark is kidnapped by terrorists while testing his new Iron Man suit. The terrorists force him to create weapons for them, but he refuses. Instead, he uses his technology to escape and become the superhero known as Iron Man.
After a thrilling demonstration, Tony shows his new weapon at a press conference, where he declares that Stark Industries will no longer be collaborating on weapon projects. This declaration infuriates Obadiah, but Tony remains adamant. Tony and Pepper share a moment alone where she reveals she knows about the cover story but is supportive of Tony's decision to no longer sell weapons to the military.
Tony later learns from Yinsen's posthumous video message that his weapon creation was actually the beginning of a plan by Obadiah to profit off of Iron Man. Tony becomes remorseful for his actions. During a visit to Yinsen's former lab in Gulmira, Afghanistan, Tony encounters some of the same Ten Rings terrorists that captured him. When they mention Obadiah's name, Tony realizes Obadiah is behind his abduction.
Obadiah, who has been secretly building an armored suit powered using technology stolen from Stark, reveals his true nature, destroys Tony's arc reactor, and orders the Ten Rings to execute Tony. Potts warns him about Obadiah's betrayal and guides him remotely as he builds a new arc reactor.