It is in this school Billy Peltzer comes to and shows Roy one of the newly born mogwai and drops a waterdrop onto it to show Roy what happens, whereupon Roy get's to keep the newly spawned mogwai. Roy does some tests on the mogwai and eventually it eats after midnight after Roy goes home, leaving the mogwai in it's cage behind and also a half-eaten sandwhich which the mogwai gets it's hand on.
The cocoon the mogwai has formed around itself as it metamorphoses into a gremlin is then kept by Roy in a box and at the end of the school day the next day, the cocoon hatches and the box falls to the floor before Roy can catch it. Roy sends off the school children and calls Billy to tell him that it hatched, then he starts searching for it and tries to lure it out from underneath a desk. The Gremlin (called Earl) bites his hand and kills him, leaving a needle sticking out of his rear end.
When Billy arrives, he sees Roy's dead body and goes for the phone, but Earl quickly scratches Billy's hand with his claws before he can reach the phone, whereupon Earl escapes through a vent. Billy then goes to get a band aid for himself at the school infirmary, where Earl pops out of the cabinet and screams at him and throws stuff before punching his way through another vent and isn't seen again, indicating it got out of the school.