Released in early 1942, it was directed by Wallace Fox, and features the gang caught up in World War II and fighting the Black Dragon Society, an enemy sabotage ring.

Rejected by the Army, Marines, and Navy for being too young, the punks help the war effort by throwing fruit at a shop they believe is owned by a Japanese American.

The boys take the law in their own hands to discover that Matsui is in league with German residents of the neighborhood who are in a sabotage group called the Black Dragon Society.

In a subplot, Danny's brother Phil has supposedly been dishonourably discharged from the US Navy but is working undercover to infiltrate the Black Dragons.

Danny's brother's girlfriend Nora, (who is in the Naval Aid Auxiliary) has a Japanese friend she went to high school with whom she seeks help to translate the message.

The gang breaks into Matsui's shop that is filled with haunted house type secret passageways and trapdoors where they discover the Black Dragon Society dressed in hooded costumes that Glimpy refers to as "Japanese Halloween".

The film captures the attitudes many Americans felt towards Japanese but this is tempered with the boys being chastised and shamed for attacking an innocent shopkeeper.