All of the gremlins are killed except Stripe, who escapes the house to a local YMCA and jumps into a swimming pool, spawning a new army of gremlins who wreak chaos around Kingston Falls. Many people are injured or outright killed by the gremlins' rampage, including Mrs. Deagle. Kate Beringer, Billy's girlfriend, finds him and Gizmo and they escape into the bank. While hiding, Kate reveals to Billy and Gizmo the real reason why she hates Christmas. When she was 9-years-old, her father disappeared on Christmas Eve and did not return on Christmas Day. Several days later, he was found dead in their chimney while dressed as Santa Claus. He was planning a Christmas surprise for Kate and her mother but had slipped and broken his neck while climbing down the chimney. Billy and Kate discover the town has fallen silent and the gremlins are watching "Snow White and the Seven Dwarfs" in the local theater. They set off an explosion, killing all the gremlins except Stripe, who left the theater to get more candy at a Montgomery Ward store across the street. As morning approaches, Billy chases Stripe into the store, where Stripe attempts to use a water fountain to spawn more gremlins. Gizmo opens a skylight, exposing Stripe to sunlight and melting him.