Walt has been abducted, the raft destroyed and Jin is missing, and all that Michael and Sawyer can do is argue. As they try to make it through the night, Michael's thoughts drift to his son - or more specifically, to the time when he had to go to court and try and save his rights to his son. We find out that Walt's mother wanted to take him out of the country, and asked Michael to sign away his rights to Walt. Michael didn't want to do so, but eventually did.
Meanwhile, Kate and Locke explore the hatch, and get to know their captor. Kate is locked up in a secure area of some sort (note: this turns out to be the armory), but Locke slips her a knife, and she gets out and begins a climb through the ductwork. Eventually Jack returns, and Kate nearly gets shot as Desmond fires a warning shot for Jack's benefit.
At the end of the episode, Michael gave Walt a small stuffed animal - a polar bear. Then the raft drifts towards land. It's the island. And then Michael and Sawyer climb off and onto land, and as they do, Jin runs out of the jungle. As he tries to tell them "The Others", they are attacked and knocked unconcious.