Watari and the 7 Monsters

"A young boy and his sister, whose parents were kidnapped, and have been raised by their Grand Parents, decide that they are going to rescue their parents and free them for the evil Chin Chun Ping and his Villain Swordswoman Knight Wang. What follows is a journey into booby traps, sinister monsters, thrills, spills, and chills. And a gigantic three headed firebreathing terrifying flying dragon which relentlessly pursues the Karate kids." - English DVD description. This is not The Magic World of Watari, though both were released in the same year.

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