I originally made this as a present for my friend Brenda (sitting at the front of Falcor, the luck dragon). I did a preliminary sketch, just to figure out what would be the most appealing angle to see this from.

Once I got everything colored, shaded and detailed, I thought the background was missing something, so I decided to beef it up a little bit, which you'll see in the next image.

I added various staples from The Never Ending Story in the background, just to tie in that mythology and make the painting that much more rich. That being said, I felt it was a bit too pronounced, so I faded the background a bit in the next image, since the focus here was Falcor and the three of us.

I fixed up the lighting here and added some shadows. I felt that it should be a sunset in the background, since that seems to be a prominent time of day in the movie.