With Janine (Lori Lynn Dickerson) acting as an intermediary, Alex (Daniel Bernhardt) offers John (Philip Tan) $1 million U.S. for the sword, and John accepts. They agree to close the deal at a restaurant that Alex frequents, but John plans to kill Alex there and then escape with both the sword and the money.
As the deal is going down, Ray (Donald Gibb) and Sergio (Nick Hill) wondering why Alex hadn’t shown up at the Kumite yet come in looking for Alex. When Ray sees him and yells to get his attention, John panics and orders his goons to start shooting. Sergio gets shot in the leg, but Ray and Alex take all of the goons out. As Alex confronts John, approaching police sirens are heard, and Alex reveals to John that he knew he was going to try to kill him, so he set him up to be caught this time, and then he beats him up. The cops arrive and take John and his men away just as Janine shows up, and Sergio is sent to the hospital. Alex gives Janine the sword and asks her to do something for him.
Alex and Demon (Ong Soo Han) end up facing each other in the finals of the Kumite. Before the match begins, Janine gives the sword back to Mr. Leung (Pat Morita), and he praises Alex for being an honorable man. She tells him that there is a reward for it, but he informs her that the reward has already been paid: He used his influence to get Sun (James Hong) who is in attendance freed from prison.
For a long time, Demon dominates Alex, but during a moment when Alex is down, he looks inside a bucket of water and notices the impact tremors being made in the water by Sun and the audience, which helps to remind him of the training he underwent with Sun to learn the “Iron Hand.” Alex gets to his feet and nails Demon with some vicious “Iron Hand” strikes, weakening him, and then knocks him out with a flying kick to win the Kumite. For his prize, he is awarded the sword, but he decides to give it to Sun.
As Sun finishes telling the story to his students, one of them asks if Alex ever got to kiss Janine. The scene then cuts back to the Kumite, where Alex is shown doing just that.
Thanks Tornado Dragon!