As they pressed further into Merlot's facility, the elevator took Sasuke and Team RWBY along with Kabuto's team to the level where the main lab was located. As they exited the elevator, the two teams began to pick up a foul scent. 

Ruby: Ewwww...this place smells terrible.

Yang: I wish I could say something funny about this place, but it's just so gross and sad here.

Weiss: What has Merlot done with this part of the island?

Blake: There's....nothing even alive here.

As the two teams investigated the stench, they came across one of the labs in the level. Within the level was a puddle of a green substance. Kabuto inspects the room and sees pipes running along the room.

Kabuto: There appears to be equipment extracting a green substance and pumping it elsewhere. From the looks of it, it's most likely toxic.

Sasuke: Then it's probably best if we watch our steps. Whatever he's harvesting this substance for, it's not good. 

Zaku: Way to state the obvious. 

Kabuto: Zaku. Sasuke has a point. It's possible that he's using this substance to create those....Grimm. Whatever it is, it seems to be empowering the Grimm.

Suddenly, Merlot's voice was heard on the intercom.

Merlot(Intercom): Right you are, young man! This magnificent substance has had a wonder of effects on the Grimm.

Kabuto: Your obsession will be your downfall.

Merlot(Intercom): The Grimm are a superior species, fascinating in their biology, their unbridled, raw aggression and lack of sentience make them the perfect vessel. It is only natural that I must enhance that power.

Sasuke: That ends now. We're shutting you down. 

With that, Sasuke and Team RWBY along with Kabuto's team decided to show down the valves pumping the laboratory with the green substance. But as they moved for the main refinery room, they were set upon by a group of Droids that open fired on them. 

Zaku: Scrap incoming!

Zaku unleashes a concussive sound attack on the Droids, blasting them back. This prompts the others to attack. Sasuke unleashes a powerful Chidori on a Droid, destroying it. At the same time, a small group of Mutated Beowolves began chasing at them.

Ruby: GRIMM INBOUND! 

The Mutated Beowolves charged through the remaining Droids and clashed with the two teams.  Despite these Grimm being of smaller size, they still proved stronger than regular Grimm. The Grimm soon pushed them into the main refinery room. During the fight, Kabuto seizes the opportunity to try and turn off the valve.

Sasuke: We need to cover Kabuto!

Sasuke along with Team RWBY and the rest of Kabuto's team clashed with the Mutated Beowolves while Kabuto moved to shut down the valves. When a Mutated Beowolf moved to attack Kabuto, Sasuke impaled the Grimm with a Chidori strike followed by a swift decapitation. After a fierce battle, the valve was shut down. When it was shut down, the machinery pumping the green substance shut down. At the same time, both teams were able to finish off the Mutated Grimm.

Zaku: Ha! Too easy! 

Yang: Sheesh. Someone thinks very highly of themselves. 

Zaku: If you kids can't keep up, then stay out of the way.

Weiss: We're all in this together. 

Zaku: Says you, princess!

Dosu: Play nice, Zaku. It was only easy because we had extra help. 

Kabuto: Dosu's right, Zaku. Things would've been a lot more difficult were it not for Sasuke and his team. 

Sasuke then walked over to the console and destroys it with a Chidori strike. It wasn't long before Merlot's voice was heard again on the intercom.

Merlot(Intercom): Was that necessary, young man? Building this refinery took quite some time.

Sasuke: I can't allow this to be used again. 

Kabuto: I must admit, after looking over the reports on the disaster that befell on Mountain Glenn, I'm surprised that you survived. Was it sheer luck or part of your master plan?

Merlot(Intercom): Would you believe me if I told you it wasn't my fault? 

Ruby: You were conducting experiments on Grimm! What did you think was going to happen?!

Merlot(Intercom): Admittedly, Mountain Glenn is a bit of a sore spot for me. Decades of hard work, countless research projects, not to mention all of the specimen I'd collected over the years - all lost without a trace.

Weiss: Let me get this straight...you're upset that you lost your research? What is wrong with you?!

Yang: Doc clearly has issues.....

Merlot(Intercom): The work done at Merlot Industries was critical in the advancement of artificial intelligence and genetics. Without it, Remnant would still be in the dark ages.

Sasuke: And what about the city that was destroyed because of your research? People died because of what you set out to do. My only question is how much of the damage were you personally responsible for?!

Merlot(Intercom): Well how else was I supposed to conduct my research? Our supply of test subjects was running thin. Drastic measures needed to be taken. But I doubt any of you would understand.

At this point, Sasuke and Team RWBY grew more disgusted at Merlot's actions. It was clear to them that Merlot was not only willing to sacrifice countless innocent people in his experiments, but he truly believed that it was for the greater good. 

Ruby: This....this is evil and wrong! There is no way any of this can be justified!

Merlot(Intercom): Oh my dear, you don't know the half of the work that I have done here. While you have provided me with invaluable results for my Grimm, you've all become a rather....bothersome thorn. But I am a generous man and am willing to let you all go if you all simply walk away.

Sasuke: If you think we're going to walk away, you're mistaken. 

Merlot(Intercom): If that is what you decide, I cannot dissuade you. But know that whatever happens next is entirely on you.

With that, Sasuke and Team RWBY along with Kabuto's team began making their way to the main laboratory to put an end to Merlot's experiments. At the same time, Merlot was already preparing his lab for the arrival of the Kybuck Clan and he intended to end his experiment with them.