Today's News

Vancouver, BC, February 10, 2023--(T-Net)--Burcon NutraScience Corporation (TSX: BU), a global technology leader in the development of plant-based proteins for foods and beverages, today issued a letter to shareholders from its Chief Executive Officer, Kip Underwood.

Dear Shareholders,

I am writing to you in my 10th week as CEO of Burcon NutraScience Corporation. I joined Burcon because I believe in the future of plant-based foods and the role Burcon's innovation can play in enabling that future. During the past few weeks, I have learned about both future opportunities and near-term challenges. One challenge, in particular, is our investment in Merit Functional Foods Corporation ("Merit"). It is important to us that you understand how the Merit situation affects Burcon, our actions, and our forward plan. Independent of these short-term issues, I am even more convinced today that our innovative plant protein technologies will play a critical role in the future success of plant-based foods and in improving the health of our planet.

Merit Functional Foods Corporation Situation

For the past six months, Merit has made significant progress. Daily production performance has improved while sales continue to increase as compared to prior year. Customers have provided feedback that the products are "best-in-class". Unfortunately, the overall financial performance of the business has fallen short of expectations and led to the current cash flow concerns.

Since inception, the shareholders of Merit, including Burcon, have provided significant financial support to Merit. Most recently, in September 2022, Burcon announced that the shareholders of Merit provided loans in the aggregate amount of $3 million to address Merit's anticipated liquidity requirements as it continued to ramp up its production and sales. In late 2022, Merit began a process to identify a new strategic investor for its business. To-date, no funding has been received from a new investor.

In the near term, we have real concerns about Merit's financial situation and viability. The situation has forced Burcon to reassess our participation in the Merit business and led us to take a series of actions which are outlined below.

We are offering a level of transparency that is integral to Burcon's shareholders. It is important that you understand both what we are doing and why we are doing it.

Burcon remains committed to the Merit business and firmly believes in its potential.

Based upon this belief, we have taken the following actions:

• Engaged in discussions with the lenders of Merit to propose terms that maintain current business momentum and provide a path to profitability;
• Burcon is exploring interim financing for Merit while working on a more specific, longer-term funding solution;
• Burcon is prepared to fund ongoing operating expenses and debottlenecking capital with support from our largest Burcon shareholder to back the overall project;
• Within Burcon, we have made tough choices to control costs and ensure that our capital and efforts are going towards the greatest near-term opportunities; and
• Evaluating new plant protein markets that can be targeted with the combination of Burcon's technology and Merit's production capability.

If our funding plans are successful, Burcon could have, for the first time in its history, a chance to own its destiny. We could have the opportunity to develop, produce, and market our innovative products. We expect the process and negotiations with Merit's existing lenders to take several weeks. We are working with both the Merit team and lenders to ensure that the ongoing business operations continue without disruption. There may be other financing offers for Merit from competing organizations. We will continue to put our best foot forward and work to create the company Burcon has always aspired to become.

We recognize the news of Merit Functional Food's situation may be a surprise. While there is risk in our current path, we believe this also presents Burcon with a significant opportunity.

We are thankful for the commitment and patience our investor base has shown in the past and are hopeful that it will continue in the future. We look forward to your continued support as we carve a path towards profitability.

Sincerely,

Kip Underwood
Chief Executive Officer

About Burcon NutraScience Corporation

Burcon is a global technology leader in the development of plant-based proteins for foods and beverages. With over two decades of experience formulating high-purity proteins that have superior functionality, taste and nutrition, Burcon has amassed an extensive patent portfolio covering its novel plant-based proteins derived from pea, canola, soy, hemp and sunflower seeds, among other plant sources. In 2019, Merit Functional Foods Corporation ("Merit Foods") was established between Burcon and three veteran food industry executives. Merit Foods has since built and commissioned a state-of-the-art protein production facility in Manitoba, Canada that is producing, under license from Burcon, best-in-class pea and canola proteins for the food and beverage industries. Burcon currently holds a 31.6% shareholding interest in Merit Foods.