Nightmaster (1988) on Netflix

Plot summary

A group of high school students studies karate under Steve Beck, a veteran of an unnamed war who was the only survivor of his platoon and believes discipline and determination kept him alive. His class trains at five in the morning, so the students doze through Sonia Spane's lessons, and Spane, Beck's former lover, tells him the schedule is too much for them. At night the same students meet in a factory for kuma, a simulated war game whose losers are marked with fluorescent dye. Robby Mason, Beck's prize pupil, is preparing for a televised kickboxing tournament, and he is growing closer to his classmate Amy. Guy Duncan, a fellow student who sells drugs, lurks on the edge of the group and at the bar where they gather.