Battle rages outside the gates of Erebor. The army of the Iron Hills Dwarves has come as requested to assist Thorin in his attempt at protecting his home. However, the leader of the Erebor Dwarves himself is cowering inside the walls, unwilling and unable to face the chaos he helped to orchestrate. 

Elves and Dwarves are no longer the only armies on the field before the gates of Erebor. What Gandalf had seen and the army about which he warned Thranduil and Bard has now come, with their leader, Azog, on Ravenhill instructing its every move. There is now no time and space to fight out their old grievances, Dwarves and Elves must unite against a common enemy. 

Just as Thorin was deliberating what to do in this blackmail situation, the joyous sound of marching Dwarves reaches his ears. His hopes and wishes had come to fruition, for his cousin is here with his army to help in settling the situation, or rather aggravating it even more. The Dwarves of Erebor are no longer alone. 

The dawn of a new day has broken, the day of great significance, will Dwarves, Elves and Men come to an agreement or will the day end in war. It all now lies in the hands of a mad, stubborn, dragon-sickness stricken King Under the Mountain. The Arkenstone will be used as compensation for the share of the treasure that is owed to both races, or will it?

The Dwarves have taken to their defense with a destructing power by decapitating the guarding monument to break the path to their gate making it a bit more difficult for the gathering enemies to enter their reclaimed kingdom. On the opposite side Bard and Thranduil take to an impromptu Council with Gandalf.

While the Dwarves arm themselves with the armor of their ancestors, the Men of Lake-town prepare for war by practicing sword fighting in the square before the Great Hall. Amongst them hurries Gandalf on his way to meet and warn Bard about the army of Orcs which he has seen pouring out of Dol Guldur while he was caged above ground awaiting his own death. 

With Thorin’s certainty of prevailing the battle that awaits him outside the gates of Erebor and his dismissive attitude toward the bargain struck between the two races, Bard gallops back to Thranduil, awaiting him before the doors of Dale.

Bard takes a leap of faith and rides towards Erebor to attempt a conversation and a compromise with Thorin, so as to deter the Elven King Thranduil from attacking the Dwarves. No matter how much destruction and death the Dwarves’ waking of the dragon may have caused his people, Bard still believes in Thorin’s keeping of his promise. 

The mention of people of Lake-town swarming into Dale has driven Thorin to action, enraged defensive action. All Dwarves are called to the gate of Erebor to participate in building a wall thereby securing their lives, or more importantly, the treasure hoard within the mountain. They are able to defend themselves against all manner of foes, we have seen that. However, they need a solid structure to keep intruders out of the way of their gold. 

Galadriel has banished Sauron and his nine servants to the East, leaving her to convalesce in Lothlórien. Saruman, promising to deal with Sauron alone, we can assume made his way into the East where he began his negotiations with the rising force of evil in order to help it spread as well as provide him with the possibility of ruling alongside it.