

The South Seas Alliance, a cult faction of the Federation, plots to declare itself independent. Furthermore, it is discovered that they possess the Reuse P. Device technology of Daryl's Psycho Zaku. The Spartan is assigned to track and destroy the Psycho Zaku before the South Seas Alliance can mass-produce the technology. In Antarctica, Bianca's squadron is ambushed by Zeon mobile suits. Io sorties in the Atlas Gundam and dispatches the enemy units before facing a Grublo mobile armor. The battle sends both units far too deep underwater and Io with his equipment lost slowly sinks to the bottom of the sea, but Bianca in her damaged Guncannon Aqua lifts him back to the surface.
The Universal Century began with mankind moving its burgeoning population into outer space. In U.C. 0079, the colonies furthest from the Earth, Side 3, proclaim themselves the Principality of Zeon and declared independence from the Earth Federation government. War was waged. Now, nearly a year has passed since that war broke out. In a debris cluster known as the Thunderbolt sector, the remains of many space colonies and battleships destroyed by the war circle. Here, a violent struggle has played by the Zeon Forces that seized control of the sector and the Federation Forces whose mission is to regain it…
During the Full Armor Gundam's second sortie in the Thunderbolt Sector, Io once again confronts Daryl. Daryl narrowly escapes after throwing a Cracker grenade at the Gundam, but he loses his left hand in the process. As the Living Dead Division is desperate to hasten the Reuse P. Device project to combat the Gundam, Daryl has his right hand amputated so that his body will have full control of the experimental Psycho Zaku.