In Mexico City, May and Coulson are staking out a dress shop in Lola, while May discusses how Lumley could have escaped SHIElD’s notice, including an elaborately imagined plot involving hiding in the wheel well of a 747. Coulson interrupts May, wondering why she’s talking more than she ever does, and curious why May all of a sudden is interested in Skye’s background. He wants to know if she really cares about Skye or if this is just a way to distract him. She says it’s both, but that Skye has proved valuable and dependable and she does genuinely care about her. Coulson confesses that he doesn’t believe anything anymore, and if they changed his memories he wonders what else they changed. May tells him that she knew him before and after his death and that he hasn’t changed at all, and he seems to finally believe her. He tells her he’s just tired of secrets, and that he wants to root them all out. May pauses for a second and says, “Agent Ward and I have been having sex,” but Coulson has just spotted Lumley so that will have to wait.
May takes off after him, chasing him down an alley and cornering him. They fight, but May seems to have the upper hand. Lumley pulls what looks like a suicide pill out of his watch, but before he can swallow it May has kicked it away. He manages to knock her down but as he goes to flee Coulson drives up in Lola. Lumley starts to climb, but Coulson simply flips a switch and Lola rises into the air right alongside him (the first time we’ve seen Lola fly since the pilot!). Coulson says his name and that he’s from SHIELD and Lumley replies, “Oh thank god. This is about the baby girl, isn’t it?”
They take Lumley back to the Bus, where he looks over the information they’ve gathered thus far. Seeing a picture of Agent Avery, he tells the story of a mission involving many agents, who went to China to investigate an 0-8-4 (an “object of unknown origin”, like the one encountered by our team all the way back in the 2nd episode). They encountered a village whose entire population had been killed, and when the first team died, Limley, Avery and the backup team went to investigate. They found the team leader hiding under a bridge, having been shot but still holding the 0-8-4. The agent died, however, and Lumley observed that “the poor thing was covered in blood.” This gets confused looks from Coulson and May, but they eventually realize that Skye was the 0-8-4.
The agents returned with the baby Skye, but one by one the rest of the team was executed until just Avery and Lumley were left. They realized that they had to protect the girl, so Avery forged Level 8 clearance and created a new identity for Skye before dropping her off at the orphanage. She fabricated orders to the orphanage to continually movie Skye from family to family as a way to keep her hidden and protected. Avery was eventually killed by whoever had murdered the rest of the Agents, having refused to give up Skye’s secrets. Lumley vanished, and for his own safety doesn’t want to know anything about Skye, other than that she’s safe. He asks if they’re going to take him in, and May says yes but Coulson says no, that it’s safer if he’s kept away from SHIELD. Lumley warns them to stay away from Skye, that death follows wherever she goes. May warns Coulson that they can never tell Skye the truth, that it’s too much for her.
Fitz bonds with Donnie, reminiscing about his own days at the Academy and comforting him that he’ll eventually make some friends. He looks over Donnie’s work and marvels at how advanced his designs are. They’re way beyond anything Fitz was doing at that age, and though Donnie says Fitz was the smartest to come through the Academy he confesses that Simmons is technically smarter but only because she “likes homework more than life itself”. However, one particular design for a power cell is giving Donnie trouble, as it keeps overheating, but Fitz solves it with an idea that completely impresses Donnie. He leaves, feeling like Donnie is a good guy who is just misunderstood.
Simmons, Skye and Ward are having a good time in the Boiler Room, where Skye points out Callie, whom she has learned is next in line for the Sandbox after Donnie and who was the only one of the group not to actually dive into the pool. Ward goes to chat her up over a game of pool, where she impresses him with her ability to easily calculate the proper lines to sink the most balls. It’s a little flirty, and he thinks he’s going to be able to nail her as the attacker when she comments that Seth and Donnie are actually friends. Not only that but they’d been talking about getting to meet Fitz for weeks, long before the incident in the swimming pool. Simmons calls Fitz with this information, as they realize that the attacks were staged in order to lure Fitz to the Academy. He doesn’t understand why until it dawns on him that he just solved Donnie’s power cell problem. He rushes back to Donnie’s room to see a much larger version of the freezing device, but is shot by Seth before he can raise the alarm.
Back on the Bus, Fitz apologizes to Coulson for being too stupid to see the plot, but realizes that Donnie and Seth could never have acquired the necessary parts without a financial backer, to whom they plan to sell the final product. Skye wants to talk to Coulson but he says not now, because they need to track down the money. Their search leads them to Ian Quinn, who happens to be on the phone with Seth that very moment. They have taken the device to a parking lot and are putting the finishing touches on it, but Seth is worried about what he did to Fitz. He wants Quinn to come pick them up and hide them from SHIELD, but he wants to see a demonstration of the device before he’ll commit. Donnie thinks things have gone too far and doesn’t want to turn it on in the middle of campus, but Seth tells him to grow a pair. Meanwhile, Quinn tells his pilot to turn around, as they don’t need to head to the Academy anymore.
Skye finally gets Coulson alone for a talk, wondering if she has done something wrong that has caused him to refuse to look her in the eye. Coulson says that she hasn’t, but that he’s the one who did something wrong. He confesses to lying to her and manipulating people, something that SHIELD is not only an expert at but that that they actually train people to manipulate. He is going to tell her the truth, but warns her that while she thinks it can’t be worse than what she has imagined, it actually is worse. He tells her everything he knows while she listens and nods while sobbing to herself, as he gently puts a comforting hand on her cheek.