|For the second section of the Marvel Cinematic Universe, see Phase Two|
- "I'd like to know why S.H.I.E.L.D. is using the Tesseract to make weapons of mass destruction."
"Because of him."
"Last year, Earth had a visitor from another planet who had a grudge-match that leveled a small town. We learned that not only are we not alone, but we are hopelessly, hilariously, outgunned."
- ― Bruce Banner, Nick Fury, and Thor[src]
In response to the events in New Mexico and the revelation of alien worlds and powers beyond our own, the World Security Council scrapped the Avengers Initiative in favor of a more practical approach - the development of weapons powered by the alien Tesseract.
Phase 1 of the Tesseract project dealt with re-igniting and harnessing the near-limitless energy of the Tesseract. The studying was done in the top secret subterranean research facility located in an unspecified location in the Mojave Desert, known as Project P.E.G.A.S.U.S.. The facility was run by S.H.I.E.L.D.'s director Nick Fury.
Phase 2 was to have dealt with S.H.I.E.L.D.'s creation of Tesseract-powered weapons for the defense of Earth from alien threats. To this end, Nick Fury ordered all of the weapons confiscated from HYDRA to be collected and studied by S.H.I.E.L.D.
In an early success for Phase 2, S.H.I.E.L.D. scientists were able to retro-fit the Destroyer armor into the Destroyer Armor Prototype Gun. However, after the Destruction of Project P.E.G.A.S.U.S., the Battle of New York, and the removal of the Tesseract from Earth, Phase 2 was effectively ended.