After Mr. Brainfright does a magic trick with Jack's new pencil, everything that the pencil draws starts coming true, but all the things that it causes to happen are bad.
Perry and his friend Cosmo find some magic pencils that turn them into the comic book characters they have invented, and a battle between good and evil ensues.
A lonely pencil draws Banjo, and also a dog, a cat, and other people, but when the characters start complaining about their appearance, the writing instrument draws an eraser, which starts to create chaos.