It's the first day back at school after the holidays and the giant doll still stands in the school grounds as a reminder of the events which occurred at Sandy Bay School last term. A re-geniused Elizabeth shrinks the giant doll and interrupts the new principal at assembly so she can wipe everyone's memory. Her plan succeeds except for Toby and Russ, who escape with their memories in tact. New boy in town, Jack Bailey, sees the shrink ray in action and is determined to find out what's going on.