The official story given by Eolith is as follows:
"An entire city was wiped off the globe with the use of the satellite weapon, Zero Cannon, during King of Fighters 2000.
This incident was reported to be the result of an artificial satellite crashing to earth, and adorned the front pages to various newspapers of countries all over the world.
A legion of individuals called for the end to the KOF tournament which always invited some sort of accident, but ironically this fighting tournament with a bad history once again regained considerable popularity.
The interest in the tournament rivaled that of the '97 contest, nay, exceeded perhaps exceeded it.
But for this tournament carried out on the international stage, an astonishing fact came to light.
A team from NESTS has entered the tournament!
What are the true objectives of the event's sponsor? There's no guarantee that even with this tournament, tragedy will not repeat itself....
The third title in the King of Fighters: The NESTS Chronicles. At last, this tournament will end it all!"
The NESTS cartel decides to host the 2001 KOF tournament so that they can use it as a method to eliminate their enemies and enter their own team into the ranks.
In the tournament finals, the Hero Team boards a special blimp that is soon revealed to be a spaceship. There they meet Original Zero, whose clone decimated the cartels' secrecy with his scheme in the previous year. He congratulates them for reaching the finals and states that they're headed for NESTS's real headquarters. He decides to entertain his passengers with a match and is backed up by his pet black lion Glugan, Ron, and Krizalid. Despite the oppressive force of his group, he is defeated moments before the ship docks at NESTS's space satellite. He stays on board the exploding ship and urges the Hero team to proceed forward.
Once inside NESTS's satellite, they face the NESTS leader, Nests. He expresses wishes for his renegade agents to return to the organization and is soon afterward killed by Igniz, who claims ownership of the cartel. Igniz also reveals that K', Kula, Krizalid, K9999 and Whip are guinea pigs/creations made for his own personal entertainment. Kula, who was separated from the rest of her team and present at the time, also heard her origin as an artificial life form. Declaring himself a god, he assaults the team as his first act of "divine retribution" and defeats them. As soon as he's about to kill K', other fighters came to intervene and help in the fight including all team leaders, Kyo and Iori. When he's defeated, he proclaims that he is fallen god and names himself a "demon" instead. He plunges the satellite through earth's atmosphere in an attempt to demolish his competition.
Thankfully, the satellite crashes into the ocean and the fighters aboard were somehow saved from the explosion, presumably thanks to Ron. K' saves Kula from drowning; in gratitude, she and her guardian, Diana, ally themselves with K' and company. K9999 and Angel are presumably still alive though their exact whereabouts are unknown. Foxy is also stabbed by them though her apparent on screen death is later revealed to be false.