Congratulations on developing a toy product that seems to have the interest of prospective customers! Based on this initial brief query, I have some preliminary comments and suggestions:
1) How you deal with domestic and international distributors should be part of an overall distribution strategy. Talk to other toy manufacturers and ask them about their distribution strategies. Study the distribution tactics from companies that are marketing similar products (by seeing which distributors carry their products). Consider some alternatives such as: Should you engage as many distributors as possible, or would it be better to have a limited number of distributors that have better terms and reach different segments of the market?
2) At this early stage of initial production during which you may have limited quantities available, you’ll want to leverage those early units by establishing relationships with key distributors that will eventually place large orders if successful. It will help you ramp-up production.
3) As you grow, consider if there are benefits to engaging domestic distributors first and then expanding to international distributors (including Canada).
4) Keep in mind that given that you’re just starting the initial production run, your initial costs may be high (due to small initial volumes) and you may not have a solid handle on all your costs (e.g. landed costs, duties, order fulfillment costs, if any).
5) Despite the above, you never want to lose a prospective distributor. If the Canadian company fits your initial distribution strategy, you’ll want to begin discussions with them about quantities and target timing for receipt of goods. You should be prepared to provide ballpark distribution prices (realizing there may be additional costs involved for international sales). If they have a serious interest, ask them to send you a Request for Proposal or Request for Quotation detailing the items and quantities they desire and any terms they require (including desire to return items that aren’t sold). This will allow you to accept the terms and provide a price based on those terms or propose alternative terms and prices for the new terms.

I'd be happy to elaborate further if desired.