A Christmas elf accidentally takes off in Santa's sleigh, crash lands in a small town, and loses the magic toy bag. Beethoven must rescue the elf, recover the bag from greedy crooks, and return the sleigh to Santa in time to save Christmas.

In wintry Winnipeg a man struggling to keep the poor lodging he can find meets a homeless man lugging around an unopened electric heater. They cook up plots to get some money for the heater and survive the cold.