Yea indeed you enter your first battle with 0 Life and die from the very first attack if you don't use up several healing potions before from the very beginning, so indeed your life and stamina for attacks start to regenerate only after your first battle has been won. Also - the game doesn't tell you that you can use potions in battle, I found that out by accident. Also - that potions of sturdiness which cost me 29 coins was a waste of money - it promised to increase armor in battle, and I used it during the battle but nothing changed at all. Its effect was shown on the dragon, but enemy attacks from crabs and salamanders did the same damage to me as before I used it, 2 and 1 HP respectively, so it was a waster of turn (and money).
I'll probably play this game a little more some time, these are just first thing I noticed by playing it around 20 minutes. I love anything dragon-related so forced myself to play it despite its shortcomings. Random encounters indeed happen way too often, I get seriously hurt after a battle with 2 crabs and salamander where a lot of my attacks miss and enemies get critical attacks 2-3 times, barely survive, then just start moving to collect coins or explore the level and new battle starts! And this happened several times already. I had to use potions to survive, and now I have to stand in one place and wait for the dragon's life to regenerate to continue without risk.