Effective January 1, 2009, CuraGen Corporation ("the Company") adopted FASB Staff Position EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities ("FSP EITF 03-6-1"). FSP EITF 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in earnings allocation in computing earnings per share under the two-class method as described in SFAS No. 128, Earnings per Share. Under the guidance in FSP EITF 03-6-1, unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method.

In connection with the adoption of FSP EITF 03-6-1, the calculation of basic and diluted earnings per share now includes shares of unvested restricted stock, which are deemed to be participating securities, except for periods of loss from continuing operations, as these participating securities do not have an obligation to share in the Company's losses. Accordingly, as a result of the inclusion of the unvested restricted stock as participating shares under the two-class method in the computation of earnings per share, the basic and diluted earnings per share for the year ended December 31, 2008 were affected.

The adoption of FSP EITF 03-6-1 did not have a material impact on the Company's financial condition, results of operations or cash flows for any period presented in its 2008 Form 10-K. Additionally, the adoption of FSP EITF 03-6-1 had no impact on earnings per share, basic or diluted, for the years ended December 31, 2007 or 2006 as the Company reported a loss from continuing operations for those years.

As a result of the retrospective presentation and disclosure requirements of FSP EITF 03-6-1, the Company will reflect the change in presentation and disclosure relating to basic and diluted earnings per share for the year ended December 31, 2008 in its future filings.

The effect of adopting FSP EITF 03-6-1 on basic and diluted earnings per share for the year ended December 31, 2008 is as follows:

                                                            Year Ended
                                                         December 31, 2008
        Basic EPS:
        Income per share, as reported                   $              0.44
        Income per share, as retrospectively adjusted                  0.43

        Diluted EPS:
        Income per share, as reported                   $              0.44
        Income per share, as retrospectively adjusted                  0.43