Still on the run from the law, Sonic the Hedgehog is unaware that Dr. Robotnik has orchestrated this entire sequence of events from the beginning. Robotnik reveals to the now-captured Knothole village that the King Acorn they've been trusting has been a robotic duplicate all along. In typical villainous fashion, Robotnik gloats over the helpless Knothole village, allowing them the pleasure of living long enough to be obliterated by his brand new super-weapon: The Ultimate Annihilator, a devastating satellite-mounted laser cannon that erases matter at an atomic level.
Back at Knothole, the true traitor is revealed: Drago, of the Wolf Pack. Drago tricked another freedom fighter named Hershey in to disguising herself as Sonic. Hershey thought she was killing Snively, Dr. Robotnik's right-hand man - but the mask she wore alters her vision so that everyone she sees at look like Snively, including Princess Sally.