Leland offers to drop the idea, but asks Leslie if he can portion off a small amount of the factory to develop toys of his own. He asks Leslie to stay out of the area for fear that his toys may not be good enough. Unknown to Leslie, Leland is using the space to develop miniature war machines that can be controlled remotely, aspiring to sell these to the military. However, the military leaders refuse to buy into his plan, and Leland, becoming unhinged by their refusal, moves ahead with his plan independently. He takes over more and more of the factory space and increases security on these areas. When Leslie sees children being led into one of Leland's secure areas, he finds a way to sneak into the space. Inside, he discovers Leland training the children to operate the miniature war machines with arcade-like interfaces so the children would not be aware they are actually operating real war equipment. Leslie flees before he is discovered, barely escaping the "Sea Swine" amphibious drone guarding an exit, and makes his way to Gwen's house to reveal what he saw. Leslie is unaware that Leland has seen his actions through spy toys monitoring the area, and prepares to defend his parts of the factory, becoming more demented and promoting himself to general of his own army. Patrick learns that Leland lied about the death of his mother, and quits to warn Leslie.
The children, ranging from infants to 6 years olds, have been playing with the toys since Monday and reporting back to teachers whether they like them.