It is an inventory item from KQ7 for Princess Rosella.
It is King Otar 's guardian and boyhood companion, and as such they have an innate connection. Apparently, it had been "dormant for years," and requires magic to awaken (such as some kind of white powder - in Matilda's case; or from an armband jewel - in Otar's case). This insinuates that the kingdom, or at least the circumstances surrounding the Troll King, have been peaceful until Malicia 's scheme.
It is a small creature with a green, toad-like body and large yellow eyes. Small purple wings sprout from its back while what appears to be a purple horn surrounded by purple scales protrudes from its nose.
Due to its strong connection with the Troll King Otar , ans seems to always know where he is. When the king is in trouble, the Dragon Toad will help him where it can, often reporting to his childhood nursemaid, Matilda , to request for assistance. It is capable of flight, speech, and even excavation.