After you have left Bale follow the new path. It's quite a long one, and you'll encounter at least two random battles. When you're at the end, enter the Town of Hoax.
Main quest[edit]
You're free to explore once the little cutscene is over. You can head to the hotel under the stairs to fully heal your party, for a fee of 10GP. There's also a chest with an Angel's Prayer. Make sure you don't forget the stardust in the house to the left on the second floor. There will be a fireplace which contains the stardust. After that go through the door under the balcony. Go near the men to trigger a cutscene. He'll introduce himself at Kaiser, the head of the Eighth Knighthood. He's preparing for the raid of Sandoras and says that they're using a Dragon. Kaiser proposes that Dart and Lavitz should be the guard at night while Shana prepares the food. After the meeting, you're free to explore again. Go out the house, enter it again and talk to Kaiser again. He'll ask if you're ready, be sure to be prepared, because you won't be able to take breaks. Once you're fully prepared, choose the "We are fine now" option.
Just go up the stairs and let the cutscenes play out, then go back down the stairs. Sandora will attack and you'll have to fight two Sandora Soldiers. Also note that you only have access to Dart and Lavitz. They'll just throw knives and slash you like the ones in the beginning of the game, obviously stronger and with 40 HP each. You shouldn't have any problem disposing of them. And now for the real fight.
Boss fight: Sandora Elite[edit]
He has around 250 HP and uses Dark element attacks. He shouldn't be too much of a problem. His standard attacks include throwing weapons which does low damage and grabbing you with a giant chain, pull you airborne and then smacking you down to the ground. Doesn't do a lot of damage, but isn't exactly weak. He can also use a spell where he chants while doing handseals, then slamming a green orb into the ground which will do fair amount of damage to both Dart and Lavitz. Just bash him with your additions and heal when necessary.
When he's down to around half of his health, he will perform a new attack. He starts chanting again, then spins around fast which will create two clones, so now you have to figure out which is the real one. If you hit the real one, the clones will disappear. If you hit a clone, you'll do no damage and waste a turn. Note that the clones can actually attack you just like the original. One way to find the real one is look at the shadows. The shadow of the real one will be slightly bigger. If you can't see this then you can use the attack spell Meteor Fall, which will hit all the enemies, including the real one of course. Don't bother using any other attack item since he'll be dead before you know it. After you kill him, you'll face the next boss, the Giganto Kongol.
Boss fight: Kongol[edit]
Kongol is a Giganto, which means that he's weak against spells and only uses physical attacks. He uses Earth attacks and has around 250 HP. One thing you have to know from the start is that you can't mess up your additions. If you do, he will counter you and damage you. All he does is slash you with his giant ax with does low damage. You can use additions, or you can use the Spear Frosts if you bought them, with can do up to 60 damage.
After a while he'll decide that he doesn't need weapons, so he'll drop his ax. Now he can run towards you and slam you with him arm which does medium damage and pick Dart and Lavitz up, slam their heads against each other several times, throw them into the air and then punch them into a wall, quite impressive, and does average damage to both. Heal when you have to, but try not to use your Healing Breeze (if you have one) since there'll be better opportunities to use it. Either pummel him with your additions if you want to train, or use Spear Frost if you want to end it quickly. When you 'beat' him Dart will try and slash him, but Kongol will just smack him to the ground. You'll be saved by the traveler from the beginning again and she'll activate your power, after which you turn into a Dragoon and beat Kongol to the ground. He'll give you 50 GP, 300 EXP and a Power Wrist for your trouble.
Kongol will flee and Shana will come out of the house, wondering what happened to Dart, where after Dart collapses. You'll wake up in a bed where the woman, named Rose will explain everything. You'll have a dialog option, choose whichever one you want because, again, it has no real consequence. When you're back in control, you can talk to Rose to get a tutorial about how to use Dragoons in the game. When you're all set, exit the town.