Sawyer makes up a backstory for Horace, chooses name James LaFleur

Sawyer wakes up on a couch in the recreation room in the Dharma barracks (this is the same room Kate was kept in when she was caught trying to free Jack from the others in season 3 and where Locke held Sayid and Ben in season 4). A Dharma logo is hanging on the same wall the couch is on. This logo was not there in previous episodes, so the others/hostiles most likely removed it.

When Sawyer wakes up, Horace Goodspeed is standing next to him. They begin to talk and Horace tells Sawyer that they have a defense protocol to protect them from the hostile, indigenous people of the island that they don't get along with. Sawyer tells him that his name is James LaFleur but he can call him Jim. Everyone told Horace that he needed to talk to Sawyer because he is the boat captain. Sawyer tells him that their salvage vessel got caught in a storm and shipwrecked and that it probably hit the reef. Sawyer continues telling him they were looking for a famous an old slave ship called The Black Rock out of Portsmouth, England. Horace says that he hasn't heard of the ship. Sawyer says that they were wandering the jungle looking for missing members of his crew when they found Amy and the hostiles. Horace tells him that he's sending him and his crew to Tahiti on the submarine. Horace continues saying that Sawyer and his people can't stay on the island and look for their missing crew because the only people allowed to stay in the compound are members of the Dharma Initiative. Horace closes by telling Sawyer that he is not Dharma material.