Reminds me vaguely of Steele from 'Balto' (Whom I thought was gorgeous, though as I charater I didn't much care for him, too stero...but I digress) as well. I love the fragon, it's adorable...and angry apparently... Good jewlery details on the wolf. What medium is this? Copics?
And for a BG I'm thinking a dark, temperate forest scene. I'd chuck some light snow on he ground but by color it seems like the fragon might be unhappy being cold.
Oh, for a background why don't you do it with a cave-ish lava-y background? It would suit the fragon, an dit would be like the werewolf went out to find it. And the fragon is all like "Bitch I bite you!"