Continuity mistake: At the end of the final match, the announcement is made it's the first time in history the defending champion kept his title. Yet in Karate Kid 1 Johnny Lawrence had already won the championship twice and was there for his 3rd time.
Continuity mistake: The bonsai tree from the cliff changes size and its amount of leaves during the film.
Continuity mistake: When Daniel and Jessica are about to climb back up the cliff face, while Mike and the other guy are helping the sun is changing in every shot.
Continuity mistake: After Mike hits Daniel at the bonsai store he gets a bruise on his left cheekbone. The next day it's gone then it reappears when he starts training with Silverman.
Continuity mistake: When Jessica and Daniel get to the cliff to get the bonsai tree, the sun looks like 6 or 7 pm but when they are about to descend the sun is at a different position.
Answer: He lost all his students after he flipped out on Johnny. Without students, he couldn't pay his bills.
Greg Dwyer