Near death, Zevo Toys founder Kenneth Zevo summons his brother, Leland Zevo, a three-star military general, to take over as president of the company. Kenneth explains that neither his son, Leslie, nor his daughter, Alsatia, are ready to take charge, but he hopes Leslie will be prepared once Leland retires. Privately, Kenneth tells his assistant, Owen Owens, that putting Leland in charge will force Leslie to grow up and learn to take responsibility. Leland is initially unwilling to leave his beloved military post, but when Kenneth dies, he has no other option but to run the company. After the funeral, Leland tours the factory where staff show off the company’s whimsical toys and novelty items. However, Leland is unimpressed, chiding the inefficient production and eccentric staff, especially his niece, Alsatia, and nephew, Leslie. When Leland learns that industrial espionage is common, he calls in his son, Patrick Zevo, who works in military covert operations, to take over security. Patrick introduces heavy protocols, which make the employees uncomfortable. Leland announces the company will start a line of military toys and deemphasize the existing product. However, he is unhappy with the war toy prototypes. Patrick reminds him that other companies have had years to develop their military toys, so it will take the Zevo designers time to catch up. When Leslie argues that military toys represent a philosophical contradiction with the company’s traditions, Leland agrees to cancel the new line, but says he needs restricted space to work on projects of his own. Leland and his son, Patrick, go a video arcade and see children playing combat video games. Leland dreams of creating remote controlled, toy-sized planes with deadly fighting capability. He speculates they could decrease the cost of a fighter plane from $450 million per plane to $5,000 by reducing the size, thereby creating a million planes for the cost of one human-sized aircraft. The remote controlled planes could be operated by children on video panels, just like at arcade games. In the following weeks, Leland appropriates more space within the factory until other divisions are shut down entirely, and many toy designers quit. Meanwhile, Owen Owens observes that buses deliver school children to the factory each day, all of whom go to the restricted area where Leland is working on his secret project. Leslie meets Gwen Tyler, who was hired by Kenneth Zevo just before his death to work in the copy room. They flirt, and soon go on dates to the few remaining whimsical areas of the toy factory. Leslie confronts Leland about his restricted space, but the general refuses to give him any answers, and denies that he has hired school children to work in the factory. Leslie steals a security pass to get into Leland’s domain, where he discovers youth at video game stations, doing battle in various war scenarios. Security guards discover Leslie and he runs away, but falls into a water tank where a mechanical toy “sea swine” attacks. Leslie escapes unharmed, but Leland dismisses the monster, saying it is just a new “water toy” he is testing. Military officials from Washington, D.C., tour Leland’s restricted area and are impressed, believing they can get money appropriated to fund the general’s military-style toy planes. Patrick Zevo visits his girl friend, Nurse Debbie, who inadvertently reveals she has also been having an affair with his father, Leland. Debbie also reveals that Patrick’s mother did not die of appendicitis, but was killed while on an undercover mission for Leland to Vietnam, disguised as anti-war sympathizer, actress Jane Fonda. Devastated, Patrick tells his cousins, Leslie and Alsatia, that his father has been making a “deadly war machine.” Leland’s next phase will be to establish daycare centers in poor neighborhoods. There, children will be trained to use computers and lock on military targets. Eventually the youths will fly remote controlled planes on real combat missions, navigating from computers. The cousins and Owen Owens go to the restricted area while Leland monitors them on security cameras. The general sends in small toys, outfitted with real guns and bombs, to attack. The group escapes to a warehouse where the old, whimsical toys Zevo used to produce are stored. The old toys become active and release them to confuse their military counterparts. A battle among the toys ensues, and Leland’s toy tanks break into the warehouse, followed by model helicopters equipped with miniature missiles. Leslie escapes and goes to Leland’s office, where he destroys the main computer, causing the electricity throughout the factory to shut down. Leslie and Leland fight, while the backup generator comes on, activating the mechanical “sea swine.” The monster shoots Alsatia, who turns out to be a robot that Kenneth Zevo created when a young Leslie wanted a sister. The sea swine also attacks Leland, knocking him unconscious. When he regains consciousness, the general is crippled and bedridden. Leslie takes control of the factory, shuts down the military operation, and Zevo Toys resumes manufacturing its signature toys. Patrick returns to the military, while Leslie rebuilds Alsatia. Leslie, Gwen, and Alsatia visit Kenneth Zevo’s grave to tell him the company is in good hands now that Leslie is in charge.