UNITED
STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549  FORM
10-Q __________________________________  (Mark One)   x

Quarterly
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934  For the Quarterly Period Ended June
30, 2008  OR  o

Transition
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934  For the Transition Period from
 to  Commission file number 0-19027  SIMTEK CORPORATION (Exact name of registrant as specified in its charter) _________________________________________________  Delaware

84-1057605(State or other jurisdiction of

(I.R.S. Employer Identification
No.)incorporation or organization)  4250 Buckingham Drive, Suite 100Colorado Springs, Colorado 80907(Address of principal executive
offices) (Zip Code)  (719)
531-9444  Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of the Exchange
Act during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes X   No ____  Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company.  See definition of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.  Large accelerated
filer   ̈

Accelerated filer   ̈Non-accelerated filer   ̈
(Do not check
if smaller reporting company)

Smaller reporting
company  x  Indicated by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act).  Yes ____
   No X  The total number of shares of Common Stock issued and
outstanding as of August 12, 2008, was 16,580,886 and 16,579,886,
respectively.  _________________________________________________________________________________________________  SIMTEK CORPORATION INDEX   PART I. FINANCIAL
INFORMATION PageITEM 1Condensed
Consolidated Balance Sheets as of June 30, 2008 (unaudited) and December
31, 2007
3Condensed
Consolidated Statements of Operations (unaudited) for the three and six
months ended June 30, 2008 and 2007
4Condensed
Consolidated Statements of Cash Flows (unaudited) for the six months
ended June 30, 2008 and 2007
5Notes to
Condensed Consolidated Financial Statements
6-16ITEM 2Managements
Discussion and Analysis of Financial Condition and Results of
Operations
17-23ITEM 3Quantitative
and Qualitative Disclosures about Market Risk
24ITEM 4Controls and
Procedures
24ITEM 4TControls and
Procedures
24PART II.
 OTHER INFORMATIONITEM 1
Legal
Proceedings
25ITEM 1A
Risk
Factors
25ITEM 2
Unregistered
Sales of Equity Securities and Use of Proceeds
25ITEM 3
Defaults Upon
Senior Securities
25ITEM 4
Submission of
Matters to a Vote of Security Holders
25ITEM 5
Other
Information
25ITEM 6
Exhibits
25SIGNATURES

26  2 _________________________________________________________________________________________________   SIMTEK CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS(Amounts in thousands, except par value and share
amounts)ASSETSJune 30,2008

December 31, 2007(Unaudited)CURRENT
ASSETS:Cash
and cash equivalents
$
                  2,649

$
                  4,387Restricted
investments
937

991Accounts
receivable - trade, net
4,639

5,222Inventory,
net
4,811

5,698Prepaid
expenses and other current assets
769

910Total
current assets
13,805

17,208EQUIPMENT
AND FURNITURE, NET
2,342

1,987DEFERRED
FINANCING COSTS AND DEBT
ISSUANCE
COSTS
-

15GOODWILL
992

992NON-COMPETITION
AGREEMENT, NET
4,454

5,344OTHER
ASSETS
209

240TOTAL
ASSETS
$
               
 21,802

$
              
  25,786LIABILITIES AND SHAREHOLDERS' EQUITYCURRENT
LIABILITIES:Accounts
payable
$
                  2,528

$
                   2,827Accrued
expenses
1,478

943Accrued
vacation payable
369

357Accrued
wages
133

179Line
of credit
493

543Obligation
under capital leases
3

21Debentures,
current
2,100

480Total
current liabilities
7,104

5,350DEBENTURES,
NET OF CURRENT
-

1,620Total
liabilities
7,104

6,970COMMITMENTS
AND CONTINGENCIESSHAREHOLDERS'
EQUITY:Preferred
stock, $0.0001 par value; 200,000 sharesauthorized,
none issued
-

-Common
Stock, $0.0001 par value 30,000,000shares
authorized, 16,555,277 and 16,554,277shares
issued and outstanding  at June 30,2008
and 16,516,419 and 16,515,419 sharesissued
 and outstanding at December 31, 2007
2

2Additional
paid-in capital
70,332

69,453Treasury
stock, at cost; 1,000 shares
(1)

(1)Accumulated
deficit
(56,090)

(50,966)Accumulated
other comprehensive income:
455

328Total
shareholders' equity
14,698

18,816TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY
$
                21,802

$                25,786  See
accompanying notes to these consolidated financial statements.  3 _______________________________________________________________________________________________________________   SIMTEK CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)(Amounts in thousands, except par value and share
amounts)Three Months Ended June 30,

Six Months Ended June 30,2008
2007

2008
2007**REVENUE**Product sales,
net
$
7,519
$
8,082

$
14,834
$
15,949Total
revenue
7,519
8,082

14,834
15,949Cost of
sales
4,075
3,859

8,240
8,294GROSS
PROFIT
3,444
4,223

6,594
7,655OPERATING
EXPENSES:Research and
development costs
3,254
2,560

5,903
4,173Sales and
marketing
1,292
1,248

2,822
2,400General and
administrative
1,515
1,190

2,890
2,299Total
operating expenses
6,061
4,998

11,615
8,872LOSS FROM
OPERATIONS
(2,617)
(775)

(5,021)
(1,217)OTHER INCOME
(EXPENSE):Interest
income
9
47

33
96Interest
expense
(79)
(89)

(170)
(187)Foreign
currency transaction gain (loss)
30
12

(23)
24Other
income
6
2

95
1Total
other expense
(34)
(28)

(65)
(66)LOSS BEFORE
PROVISION FOR
INCOME
TAXES
(2,651)
(803)

(5,086)
(1,283)Provision for
income taxes
(20)
(13)

(38)
(23)NET
LOSS
$
(2,671)
$
(816)

$
(5,124)
$
(1,306)NET LOSS PER
COMMON SHARE:Basic and
diluted
$
(0.16)
$
(0.05)

$
(0.31)
$
(0.08)WEIGHTED
AVERAGE COMMON
SHARES
OUTSTANDING:Basic and
diluted
16,553,973
16,386,770

16,543,625
16,299,925   See
accompanying notes to these consolidated financial statements.  4 __________________________________________________________________________________________________________   SIMTEK CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH
FlOWS(Unaudited)(Amounts in thousands)Six Months Ended June 30,2008

2007CASH FLOWS
FROM OPERATING ACTIVITIES:Net loss
$
(5,124)

$
(1,306)Adjustments to
reconcile net loss to net cashused
in operating activities:Depreciation
396

311Amortization
29

33Stock based
compensation
803

544Amortization of
non-competition agreement
890

890Net change in
allowance accounts
(82)

78Changes in
assets and liabilities:(Increase)
decrease in:Accounts
receivable
550

771Inventory
1,113

(1,119)Prepaid
expenses and other
192

(375)Increase
(decrease) in:Accounts
payable
(301)

(1,235)Accrued
expenses
415

288Net cash used
in operating activities
(1,119)

(1,120)CASH FLOWS
FROM INVESTING ACTIVITIES:Purchase of
equipment and furniture, net
(718)

(513)Patents
(17)

(14)Net cash used
in investing activities
(735)

(527)CASH FLOWS
FROM FINANCING ACTIVITIES:Payments on
capital lease obligation
(18)

-Proceeds from
warrant exercises
-

222Transfers from
restricted cash
54

-Proceeds from
employee stock purchase plan
74

-Proceeds from
exercise of stock options
6

3Net cash
provided by financing activities
116

225Effect of
exchange rate changes on cash
0

47NET CHANGE
IN CASH AND CASH EQUIVALENTS
(1,738)

(1,375)CASH AND
CASH EQUIVALENTS, BEGINNING OF PERIOD
4,387

4,522CASH AND
CASH EQUIVALENTS, END OF PERIOD
$
2,649

$
3,147Cash paid for
interest
$
155

$
165Conversion of
debentures
$
-

$
600   See
accompanying notes to these consolidated financial statements.  5 __________________________________________________________________________________________________________  SIMTEK CORPORATION NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  1. Basis
of Presentation  The
consolidated financial statements include the accounts of Simtek Corporation
(Simtek or the Company) and its wholly-owned and majority-owned
subsidiaries.  Intercompany accounts and transactions have been eliminated.
 The financial statements included herein are presented in accordance with
the requirements of Form 10-Q and consequently do not include all of the
disclosures normally made in the registrant's annual Form 10-K filing. These
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Annual Report and Form
10-K for Simtek filed on March 26, 2008 for fiscal year 2007.  On
February 19, 2008, the Company announced the formation of its majority-owned
subsidiary, AgigA Tech, Inc., a Delaware corporation (AgigA).  AgigA
plans to focus on the development and commercialization of low-cost, ultra-high
density, nonvolatile random access memory (NVRAM) solutions. Simtek
owns all of the convertible preferred stock of AgigA, which gives it voting
control of AgigA and substantially all of the economic interests in AgigA until
the occurrence of certain liquidity events.  The minority stockholders are
certain employees of AgigA, who own common stock of AgigA.  In addition, as
is customary for emerging growth companies, a total of 25% of the equity has
been set aside for issuance to employees and others in connection with services
to be rendered.  As of June 30, 2008, AgigA has issued 1,052,500 shares of
its common stock to its employees, which shares will vest over five years with
20% of the vesting occurring on the employees first anniversary date and the
remaining 80% vesting over 48 months.  The shares of common stock issued to
employees represent approximately 53% of the total equity reserved for issuance
to the employees and approximately 15% of the total equity of AgigA.  The
expense related to the issuance of these shares is included below. In
the opinion of management, the unaudited financial statements reflect all
adjustments of a normal recurring nature necessary to present a fair statement
of the results of operations for the respective interim periods. The year-end
balance sheet data was derived from audited financial statements, but does not
include all disclosures required by accounting principles generally accepted in
the United States of America.  Results of operations for the interim
periods are not necessarily indicative of the results of operations for the full
fiscal year.  Stock-Based
Compensation  Equity
Incentive Plan.  At
the annual meeting on June 14, 2007, the Companys shareholders approved a new
Equity Incentive Plan (the 2007 EIP) that authorizes 2,800,000 shares that may
be granted under either incentive stock options within the meaning of Section
422 of the Internal Revenue Code of 1986 (the Code), nonqualified stock
options, restricted stock awards or other stock grants.  The 2007 EIP
became effective on June 15, 2007.  With the approval of the 2007 EIP, the
Company does not intend to grant further options under the Non-Qualified Stock
Option Plan described below; however, options outstanding under that plan remain
outstanding until they are exercised or expire by their terms.  The 2007
EIP provides that the maximum number of shares with respect to which an
individual can receive a grant of options in a calendar year is 500,000 shares.
 Options may be granted to key employees, consultants, and non-employee
directors.  The 2007 EIP provides that an individual can receive grants of
both incentive options and nonqualified options.  However, only employees
may be granted incentive options.  The minimum exercise price for options
is 100% of the fair market value of the Companys stock on the date of grant and
a maximum term of 10 years.  Generally, upon termination of employment or
service, options expire three months after termination.  Incentive options
granted to an employee who holds more than 10% of the Companys stock must have
an exercise price of at least 110% of the fair market value of the Companys
stock on the date of grant and a maximum term of no more than 5 years.  6 __________________________________________________________________________________________________________  SIMTEK CORPORATION NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS   The Compensation Committee (the Committee) of the Board of
Directors administers the 2007 EIP with respect to grants to employees,
consultants and non-employee directors.  With respect to grants to officers
and directors, the Committee is constituted in a manner that satisfies
applicable laws and regulations, including Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended, and Code section 162(m).  The
2007 EIP also provides that the full board of directors can perform any function
of the Committee, subject to the requirements of the NASDAQ rules and Code
section 162(m).  The Committee has the authority to delegate to specified
officers of the Company the grants of stock options and other awards to
specified employees of the Company, and the Committee has delegated such
grant-making authority. Each option granted under the 2007 EIP is evidenced by a written
stock option agreement.  Each option holder shall become vested in the
shares underlying the option in such installments and over such period or
periods of time, if any, or upon such events, as are determined by the Committee
in its discretion and set forth in the option agreement.  As of June 30, 2008, 1,585,535
non-qualified stock options had been granted under the 2007 EIP.  All
options granted under the 2007 EIP will expire seven years from the grant date.
 Vesting of the options is as follows: · If
an officer or employee has been employed for 12 months or more, stock options
will vest over 48 months at 1/48th per month, and vesting will begin immediately
at 1/48th per month for the four year period. · If
an officer or employee has been employed for less than 12 months, no vesting
will occur until the officer or employee has been employed for 12 months at
which time the officer or employee will be caught up at 1/48th per month for
each month since the option grant and then the options will continue to vest at
1/48th per month for the remaining portion of the four year period. · If
an officer or employee is a new hire, no vesting will occur until the officer or
employee has been employed for 12 months at which time the officer or employee
will receive 12/48th of the vesting and then the options will continue to vest
at 1/48th per month for the remaining portion of the four year period. · All
options granted to outside directors of the Company will be 100% vested after
six months from the grant date.  The
Committee may grant a participant a number of shares of restricted stock as
determined by the Committee in its sole discretion.  Grants of restricted
stock may be subject to such restrictions, including for example, continuous
employment with the Company for a stated period of time or the attainment of
performance goals and objectives, as determined by the Committee in its sole
discretion.  The restrictions may vary among awards and participants.
 As of June 30, 2008, no grants of restricted stock awards had occurred
under the 2007 EIP.  From
time to time, in its sole discretion, the Committee may grant awards under the
2007 EIP in connection with one or more incentive compensation arrangements
under which participants may acquire shares of common stock by purchase, grant,
or otherwise.  All such awards are subject to the terms of the
2007 EIP.  As of June 30, 2008, no such stock awards had occurred
under the 2007 EIP.  7 __________________________________________________________________________________________________________  SIMTEK CORPORATION NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS   Employee
Stock Purchase Plan.  On
July 1, 2007, the Simtek Corporation Employee Stock Purchase Plan (ESPP),
which was approved by the shareholders at the annual meeting on June 14, 2007,
became effective.  Under the ESPP, a broad-based group of employees can
have payroll deductions of up to 10% of their pay used to purchase shares of the
Companys stock on a quarterly basis.  However, employees whose customary
employment is for less than 20 hours per week or for less than 5 months per
calendar year and employees who own more than 5% of the Companys stock are not
eligible to participate.  There are 500,000 shares authorized for issuance
under the ESPP.  The purchase price for the stock is the lesser of (1) 85%
of the fair market value of the Companys stock on the first day of the calendar
quarter or (2) 85% of the fair market value of the Companys stock on the last
day of the calendar quarter.  Employees can enroll in the ESPP as of the
first day of a calendar quarter.  On the first trading day after the end of
the calendar quarter, shares are purchased with the payroll deductions
accumulated during the calendar quarter.  Upon termination of employment,
the employees participation in the ESPP will cease and amounts accumulated
since the beginning of the calendar quarter and not used to purchase common
stock will be refunded to the employee without interest.  As of January 1,
2008, 16 employees had enrolled in the ESPP.  For the six months ended June
30, 2008, 34,858 shares of common stock were issued pursuant to the ESPP.
 The ESPP was temporarily suspended at the beginning of the third quarter
of 2008 in light of a pending transaction with Cypress Semiconductor
Corporation.  Non-Qualified
Stock Option Plan.  Through
June 13, 2007, the Company granted options under the 1994 Non-Qualified Stock
Option Plan (the 1994 Plan).  The 1994 Plan authorizes 2,060,000
non-qualified stock options that may be granted to directors, employees, and
consultants.  The 1994 Plan permits the issuance of non-statutory options
and provide for a minimum exercise price equal to 100% of the fair market value
of the Company's common stock on the date of grant.  The maximum term of
options granted under the 1994 Plan is 10 years and options granted to employees
expire 90 days after the termination of employment.  In 2004, the 1994 Plan
was extended for 10 more years.  No further options have been granted under
the 1994 Plan since the 2007 EIP became effective, and the Company does not
intend to issue any more options under the 1994 Plan in the future.  All
terms and conditions of the options granted under the 1994 Plan will remain the
same.  All options granted prior to March 24, 2006, began vesting after six
months after the date of grant, and would become fully vested after three years
and expire seven years from date of grant.  On March 24, 2006, the Board of
Directors changed the vesting schedule of stock options granted after March 24,
2006 to be as follows:  · If
an officer or employee has been employed for 12 months or more, stock options
will vest over 48 months at 1/48th per month, and vesting will begin immediately
at 1/48th per month for the four year period. · If
an officer or employee has been employed for less than 12 months, no vesting
will occur until the officer or employee has been employed for 12 months at
which time the officer or employee will be caught up at 1/48th per month for
each month since the option grant and then the options will continue to vest at
1/48th per month for the remaining portion of the four year period. · If
an officer or employee is a new hire, no vesting will occur until the officer or
employee has been employed for 12 months at which time the officer or employee
will receive 12/48th of the vesting and then the options will continue to vest
at 1/48th per month for the remaining portion of the four year period. · All
options granted to outside directors of the Company will be 100% vested after
six months from the grant date. · All
options will expire seven years from date of grant.  8 __________________________________________________________________________________________________________  SIMTEK CORPORATION NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS   The
table below reflects the expense related to options granted and outstanding
under the 1994 Plan, the 2007 EIP and the shares of AgigA common stock issued to
the AgigA employees.  Total share-based compensation recognized in the
Companys consolidated statements of operations for the three and six months
ended June 30, 2008 and 2007 are as follows: Income
Statement Classifications  Three months ended

Six months endedJune 30,

June 30,2008
2007

2008
2007(In thousands)Research and
development
$
      164
$
        65

$
      286
$
      130Sales and
marketing
57
25

105
51General and
administration
180
174

392
363$
      401
$
      264

$
      783
$
      544  As
of June 30, 2008, there was approximately $2.9 million of unrecognized
compensation costs, adjusted for estimated forfeitures, related to non-vested
options granted to the Companys employees and directors, which will be
recognized through April, 2012.  Total unrecognized compensation will be
adjusted for future changes in estimated forfeitures.  The
fair value for stock options was estimated at the date of grant using the
Black-Scholes option pricing model, which requires management to make certain
assumptions.  Expected volatility was based on the historical volatility of
the Companys stock over the past 5 years.  The Company based the risk-free
interest rate that was used in the option valuation mode on U.S. Treasury notes.
 The Company does not anticipate paying cash dividends in the foreseeable
future and therefore uses an expected dividend yield of 0%.  The
fair value of each option granted in three and six months ended June 30, 2008
and 2007 were estimated on the date of grant using the Black-Scholes
option-pricing model with the following assumptions.  There were no stock
options granted for the three months ended June 30, 2007.  Three months ended

Six months endedJune 30,

June 30,2008
2007

2008
2007Expected
volatility
81.16%
-

81.30%
79.15%Risk-free
interest rate
3.11%
-

2.80%
4.79%Expected
dividends
-
-

-
-Expected terms
(in years)
5 years
-

5 years
5 years   9 __________________________________________________________________________________________________________  SIMTEK CORPORATION NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS   The weighted average fair value per share of options granted
during the three months ended June 30, 2008 was $1.52.  The weighted
average fair value per share of options granted during the six months ended June
30, 2008 and 2007 was $1.70 and $3.90, respectively.  The
following table summarizes stock options outstanding and changes during the six
months ended June 30, 2008.   Outstanding OptionsWeightedAverageWeighted

RemainingAverage

Contractual

AggregateNumber of

Exercise

Term

IntrinsicShares

Price

(in years)

ValueOptions
outstanding at January 1, 2008
1,908,233

$4.90Granted
542,775

2.60



$         -Exercised
(4,000)

1.60Cancelled
or forfeited
(178,794)

(4.13)Options
outstanding at June 30, 2008
2,268,214

$4.42

4.00Options
exercisable at June 30, 2008
1,101,909

$5.19

4.00

$        6,610(1)1)
Represents the
difference between the market value as of June 30, 2008 and the exercise
price of the shares.  The market value as of June 30, 2008 was $1.90
as reported by The NASDAQ Capital Market.   Stock options
outstanding and currently exercisable at June 30, 2008 are as follows:   Outstanding

ExercisableWeighted Average  Exercise Price

Number
Outstanding

Remaining
Contractual
Life in
Months
Weighted
Average
Exercise Price

Number
Exercisable

Weighted
Average
Exercise Price  $1.60-$2.75
633,375
56
$  2.57
116,643
$   2.40$3.00-$3.70
363,485
56
$  3.39
223,876
$   3.40$4.10-$4.85
654,694
66
$  4.63
230,563
$   4.58$5.00-$8.30
541,301
56
$  5.93
455,468
$   5.93$9.00-$15.30

75,359
33
$12.21
75,359

$ 12.212,268,214


1,101,909   Non-competition
Agreement  In
December 2005, the Company entered into a non-competition agreement with Zentrum
Mikroelektronik Dresden AG (ZMD) as part of the acquisition of ZMDs nvSRAM
product line.  The Company assigned a value of $8,910,000 to the
non-competition agreement in December 2005.  The value assigned to the
non-competition agreement is being amortized on a straight-line basis over its
five-year life.  The Company recorded an expense, for the amortization, of
approximately $445,000 and $890,000 to sales and marketing for the three and six
months ended June 30, 2008, respectively.  10 __________________________________________________________________________________________________________  SIMTEK CORPORATION NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS   Goodwill  Goodwill
represents the excess of the total amount paid to ZMD for the nvSRAM assets
acquired on December 30, 2005 and the fair value assigned to specific assets.
 This amount will not be amortized, but will be reviewed for impairment on
a periodic basis.  As of June 30, 2008 no impairment of value has been
recorded.  Accumulated
other comprehensive income (loss)  The
functional currency for Simtek GmbH is the local currency, the Euro.
 Assets and liabilities for this foreign operation are translated at the
exchange rate in effect at the balance sheet date, and income and expenses are
translated at average exchange rates prevailing during the period.
 Translation gains or losses are included within shareholders equity as
part of accumulated other comprehensive income (loss).  As of June 30,
2008, the Company recorded approximately $455,000 in comprehensive income.   Income
Taxes  The
Financial Accounting Standards Board issued Interpretation No. 48 Accounting for
Uncertainty in Income Taxesan Interpretation of FASB Statement No. 109 ("FIN
48") which requires reporting of taxes based on tax positions which meet a more
likely than not standard and which are measured at the amount that is more
likely than not to be realized. Differences between financial and tax reporting
which do not meet this threshold are required to be recorded as unrecognized tax
benefits. FIN 48 also provides guidance on the presentation of tax matters and
the recognition of potential IRS interest and penalties. The provisions of FIN
48 were adopted by the Company on January 1, 2007, and had no effect on the
Company's financial position, cash flows or results of operations upon adoption
as the Company does not have any unrecognized tax benefits. The Company also
evaluated its tax positions as of June 30, 2008 and reached the same conclusion.  The
Company classifies penalty and interest expense related to income tax
liabilities as an income tax expense. There are no interest and penalties
recognized in the statement of operations or accrued on the balance sheet.  The
Company files tax returns in the US, in the states of California, Colorado,
Georgia and Maine and Germany.  The tax years 2004 through 2007 remain open
to examination by the major taxing jurisdictions to which the Company is
subject.  Recently
Issued Accounting Pronouncements   In
December 2007, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 141 (Revised 2007), "Business Combinations" ("SFAS No. 141(R)").
SFAS No. 141(R) significantly changes the accounting for business
combinations in a number of areas including the treatment of contingent
consideration, acquired contingencies, transaction costs, in-process research
and development and restructuring costs. In addition, under SFAS
No. 141(R), changes in an acquired entity's deferred tax assets and
uncertain tax positions after the measurement period will impact income tax
expense. SFAS No. 141(R) applies prospectively to business combinations for
which the acquisition date is on or after the beginning of the first annual
reporting period beginning after December 15, 2008. Earlier adoption is
prohibited. The Company will adopt this pronouncement in the first quarter of
fiscal 2009 and is currently evaluating the potential impact of this
pronouncement on its consolidated financial statements.  11 __________________________________________________________________________________________________________  SIMTEK CORPORATION NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS    In
December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in
Consolidated Financial StatementsAn Amendment of ARB No. 51" ("SFAS
No. 160"), which establishes new accounting and reporting standards for the
noncontrolling interest in a subsidiary, changes in a parent's ownership
interest in a subsidiary and the deconsolidation of a subsidiary. SFAS
No. 160 is effective for fiscal years beginning after December 15,
2008. Earlier adoption is prohibited. The Company will adopt this pronouncement
in the first quarter of fiscal 2009 and is currently evaluating the potential
impact of this pronouncement on its consolidated results of operations and
financial condition.  On
March 19, 2008,  The Financial Accounting Standards Board issued FASB
Statement No. 161, Disclosures about Derivative Instruments and Hedging
Activities.The new standard is intended to improve financial
reporting about derivative instruments and hedging activities by requiring
enhanced disclosures to enable investors to better understand their effects on
an entitys financial position, financial performance, and cash flows.  It
is effective for financial statements issued for fiscal years and interim
periods beginning after November 15, 2008, with early application encouraged.
 The Company is reviewing the applicability of this Statement and will
adopt this pronouncement in the first quarter of fiscal 2009 if it is
applicable.  In
November 2007, the EITF issued Issue No. 07-1 Accounting for Collaboration
Arrangements Related to the Development and Commercialization of Intellectual
Property (EITF 07-1). EITF 07-1 is focused on how the parties to a
collaborative agreement should account for costs incurred and revenue generated
on sales to third parties, how sharing payments pursuant to a collaboration
agreement should be presented in the income statement and certain related
disclosure questions.  EITF 07-1 is effective for fiscal years beginning
after December 15, 2008. The Company will adopt this pronouncement in the
first quarter of fiscal 2009 and is currently evaluating the potential impact of
this Issue on its consolidated results of operations and financial
condition.  In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option
for Financial Assets and Financial LiabilitiesIncluding an Amendment of FASB
Statement No. 115 (SFAS 159). SFAS 159 expands the use of fair value accounting but
does not affect existing standards, which require assets or liabilities to be
carried at fair value. Under SFAS 159, a company may elect to use a fair value to measure
accounts and loans receivable, available-for-sale and held-to-maturity
securities, equity method investments, accounts payable, guarantees and issued
debt. The Company has adopted SFAS 159 effective January 1, 2008, and elected not to
measure any of its currently eligible financial assets and liabilities at fair
value.  Effective
January 1, 2008, the beginning of the Company's 2008 fiscal year, The Company
adopted Statement of Financial Accounting Standards No. 157, "Fair Value
Measurements" ("SFAS No. 157"), which defines fair value, establishes a
framework for measuring fair value in accordance with generally accepted
accounting principles, and expands disclosure about fair value measurements.
 SFAS No. 157 establishes a fair value hierarchy that prioritizes the
inputs used to measure fair value.  The hierarchy gives the highest
priority ("Level 1") to unadjusted quoted prices in active markets for identical
assets and liabilities, and gives the lowest priority ("Level 3") to
unobservable inputs.  The adoption of SFAS No. 157 did not have a
significant effect on the Company's consolidated financial statements.  In
June 2008, the Financial Accounting Standards Board (FASB) issued FASB Staff
Position (FSP) No. 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 requires that the two-class method earnings per share
calculation include unvested share-based payment awards that contain
non-forfeitable rights to dividends or dividend equivalents, whether the
dividend or dividend equivalents are paid or not paid. The guidance in FSP EITF
03-6-1 is effective for fiscal years beginning after December 15, 2008. The
company does not believe FSP EITF 03-6-1 will be material to its results of
operations, statement of position or cash flows.  12 __________________________________________________________________________________________________________  SIMTEK CORPORATION NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS   2. Liquidity  During
the three and six months ended June 30, 2008 and the twelve months ended
December 31, 2007, the Company incurred a net loss of approximately $4,042,000,
$6,495,000 and $2,768,000, respectively, and has an accumulated deficit of
$57,461,000 as of June 30, 2008.  The
Company operates in a volatile industry, whereby its average selling prices and
product costs are influenced by competitive factors.  Furthermore, the
Company continues to incur significant research and development costs for
product development.  These factors create pressures on sales, costs,
earnings and cash flows, which will impact liquidity.  If
the Company is unable to achieve sufficient cash flow in 2008 it may result in
increased liquidity pressure on the Company, whereby it might be required to
enter into debt or equity arrangements that may not be as otherwise favorable to
the Company.  As
discussed in footnote 10, the Company has entered into the Merger Agreement with
Cypress and Merger Sub.  In the event that the transactions contemplated by
the Merger Agreement are not consummated, it is likely that the Company would
need to raise capital to pay for the costs incurred related to the transaction
as well as to fund ongoing product development (including the high density RAM
initiative).  However, the Company cannot assure you that it will be able
to raise sufficient capital.  3. Revenue
Recognition  Product
sales revenue is recognized when a valid purchase order has been received with a
fixed price and the products are shipped to customers FOB origin (Colorado
Springs, Colorado, Manilla, Philipines or Dresden, Germany), including
distributors.  Based on historic business with the majority of the
Company's customers and, in the case of new customers, based on credit checks,
the Company is reasonably assured that collectability on our shipments will
occur. Customers receive a one-year product warranty and sales to distributors
are subject to a limited product exchange program and price protection in the
event of changes in the Company's product prices.  The Company provides a
reserve for possible product returns, product price protection and warranty
costs at the time the sale is recognized.  The Company has a detailed
procedure to ensure that its estimates for reserves are reasonable and reliable.
 The reserve for product returns is based upon historical credits issued
for actual stock rotation returns from the Companys distributors. The majority
of the Company's distributors are permitted to rotate up to 5% of their stock
every six months with the stipulation that they must submit a replacement order
of equal dollar value to the stock that they are returning.  Certain
distributors have negotiated special terms where they may exchange product that
has not moved in six months on a quarterly basis.  However, the maximum
dollar amount of the return may not exceed 30% of their total purchases from the
Company over the past six months.  The reserve for price protection is used
when the Company authorizes special pricing to one of its distributors for a
specific customer.  To date, the estimates have not been materially
different from the credits the Company has issued under these reserves.  4. Inventories  The
Company records inventory using the lower of cost (first-in, first-out) or
market.  Inventory at June 30, 2008 and December 31, 2007 included:  June 30,
2008

December
31,
2007(In
thousands)Raw
Materials
$
                 32

$               39Work in
progress
2,554

4,447Finished
Goods
2,324

1,5354,910

6,021Less reserves
for excess inventory
(99)

(323)$             4,811

$
    
     5,698  13 __________________________________________________________________________________________________________  SIMTEK CORPORATION NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS   5. Line
of Credit  On
June 2, 2006, the Company secured a $3.6 million revolving line of credit by
entering into an Account Purchase Agreement (the Agreement) with Wells Fargo
Bank, National Association (Wells Fargo).  Pursuant to the Agreement, the
Company may sell, subject to recourse in the event of nonpayment, up to $3.6
million of eligible accounts receivable to Wells Fargo.  Advances of the
purchase price for the eligible receivables will be at an agreed upon discount
to the face value of the eligible receivable.  The amount actually
collected on any receivable by Wells Fargo that is beyond the advance will be
forwarded to the Company, less certain discounts and fees retained by Wells
Fargo (including a minimum fee of $7,500 per month for the term of the
Agreement).  To secure the Companys obligations under the Agreement, the
Company granted Wells Fargo a security interest in certain of the Companys
property.  The Agreement was renewed in June 2008, but may be terminated at
any time by the Company upon 60 days written notice.  As of June 30, 2008,
the Company had financed receivables with Wells Fargo for approximately
$493,000.  6. Convertible
Debentures  On
July 1, 2002, the Company received funding of $3,000,000 in a financing
transaction with Renaissance Capital Growth and Income Fund III, Inc.,
Renaissance US Growth Investment Trust PLC and US Special Opportunities Trust
PLC.  RENN Capital Group, Inc. is the agent for the RENN investment funds.
One of the Companys directors holds the position of Senior Vice President of
RENN Capital Group. The $3,000,000 funding consists of convertible debentures
with a 7-year term at a 7.5% per annum interest rate.  Each fund equally
invested $1,000,000.  The holder of the debenture shall have the right, at
any time, to convert all, or in multiples of $100,000, any part of the Debenture
into fully paid and nonassessable shares of Simtek Corporation common stock.
 The debentures were originally convertible into Simtek common stock at
$3.12 per share, which was in excess of the market price per share on July 1,
2002.  At June 30, 2008, the Company was not in compliance with one of the
covenants set forth in the loan agreement.  This covenant relates to the
interest coverage ratio.  On April 16, 2008, the Company received a waiver
for the covenant through April 1, 2009.  The Convertible Debentures allow
for an adjustment in the conversion price, if the Company issues Common Stock in
connection with an equity financing, where the sale price is less than the
conversion price of $3.12.  This occurred in December 2005 in connection
with the common stock sale of $11,000,000 at a price of $1.60 per share.
 Pursuant to the terms of the 2002 convertible debentures, the Company
agreed with the RENN Capital Group that the conversion price would be reduced to
$2.20 per share.   At June 30, 2008, based on the conversion rate of
$2.20 per share, each RENN investment fund is entitled to 318,182 shares upon
conversion (assuming conversion of $700,000 by each fund).  On
June 28, 2005, the Company received a waiver from the debenture holders
extending until July 1, 2006 the commencement date for principal payments of the
$3 million aggregate principal amount.  On May 9, 2007 and July 24,
2006, each of the debenture holders converted $200,000 and $100,000,
respectively, of the principal amount into 90,910 and 45,455, respectively,
shares of the Companys common stock in lieu of the Company making the principal
payments it was required to make commencing on July 1, 2006.  The
final maturity date of the debentures is June 28, 2009.  As such, the
entire outstanding balance of the debentures is included in current liabilities
in the accompanying condensed consolidated balance sheet as of June 30,
2008.  14 __________________________________________________________________________________________________________  SIMTEK CORPORATION NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS   7. Non-Refundable
Prepaid Royalties  On
March 24, 2006, the Company entered into a License and Development Agreement
with Cypress Semiconductor Corporation (Cypress) pursuant to which, among
other things, Cypress agreed to license certain intellectual property from the
Company to develop and manufacture standard, custom and embedded nvSRAM products
and Cypress agreed to pay to the Company $4,000,000 in non-refundable pre-paid
royalties of which $2 million was paid upon signing of the agreement, $1 million
was paid on June 30, 2006 and $1 million was paid on December 18, 2006.  In
addition, the Company licensed rights to use certain intellectual property from
Cypress for use in its products.  As part of the License and Development
Agreement, the Company agreed to issue Cypress warrants to purchase 2 million
shares of the Companys common stock for $7.50 per share.  The warrants
have a ten year life.  The warrants were issued upon receipt of each of the
prepaid royalty amounts.  The value of the warrants issued of $1,930,000
was determined using the Black Scholes option-pricing model and has been
recorded as an increase in additional paid in capital.   The net
balance of the non-refundable prepaid royalties of $2,070,000 were recognized as
revenue at the time the payments were received.  8. Geographic
Concentration  Sales
by geographic area, based on customer receiving locationsfor the three and six months ended June 30, 2008 and
2007 were as follows:  Three Months Ended June 30,

Six Months Ended June 30,2008
2007

2008
2007United
States
28%
18%

25%
18%Europe
19%
21%

17%
29%Far East
51%
45%

57%
40%All
Others
2%
16%

1%
13%100%
100%

100%
100%   9. Accumulated
Other Comprehensive Income (Loss)  Accumulated
other comprehensive income (loss) net of tax is as follows:  Foreign Currency
Translation Adjustment  (In
thousands)Balance at
January 1, 2008
$
328Current period
change
127Balance June
30, 2008
$
455  10. Subsequent
Event  On
August 1, 2008, the Company entered into an Agreement and Plan of Merger (the
Merger Agreement) with Cypress, and Copper Acquisition Corporation, a
wholly-owned subsidiary of Cypress (Merger Sub).  Pursuant to the Merger
Agreement, Cypress has agreed to promptly commence a tender offer to purchase
all outstanding shares of the Companys common stock, par value $0.0001 per
share (the Shares), in exchange for $2.60 per Share, net to the seller in
cash, upon the terms and subject to the conditions set forth in an Offer to
Purchase and a related Letter of Transmittal that will be distributed to the
Companys stockholders by Cypress.   15 __________________________________________________________________________________________________________  SIMTEK CORPORATION NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS   In connection with
the Merger Agreement, the Company has incurred expenses directly associated with
the potential transaction of approximately $706,000 and $760,000 in the three
and six month periods ended June 30, 2008, respectively.  The expenses
include costs incurred for legal, investment banking and other advisors.
 In addition, the Company may incur expenses of approximately $1,371,000
related to costs associated with potential severance and other payments to
certain officers and employees due to a possible change in control.      16 __________________________________________________________________________________________________________  SIMTEK CORPORATION   ITEM
2
MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS  The
following discussion and analysis in this quarterly report on Form 10-Q is
intended to provide greater details of the results of operations and financial
condition of our Company.  The following discussion should be read in
conjunction with our condensed consolidated financial statements and notes
thereto and other financial data included elsewhere herein.  Certain
statements under this caption constitute forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the
Exchange Act).  The reader should not place undue reliance on these
forward looking statements for many reasons including those risks discussed in
this document.  In addition, when used in this quarterly report, the words
believes, anticipates, expects, plans, intends and similar expressions
are intended to identify forward-looking statements.  Forward-looking
statements and statements of expectations, plans and intent are subject to a
number of risks and uncertainties.  Actual results in the future could
differ materially from those described in the forward-looking statements, as a
result, among other things, of changes in technology, customer requirements and
needs.  We undertake no obligation to release publicly the results of any
revisions to these forward-looking statements that may be made to reflect any
future events or circumstances.  Critical
Accounting Policies and Estimates  Our
consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America, which
require us to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenue and expenses and the related disclosures.  Our
accounting policies are discussed in Note 1 of the Notes to Consolidated
Financial Statements included in our 2007 Form 10-K filed with the Securities
and Exchange Commission on March 26, 2008.  The estimates used by us are
based upon our historical experiences combined with our understanding of current
facts and circumstances.  Certain of our accounting polices are considered
critical as they are both important to the portrayal of our financial condition
and the results of our operations and require significant or complex judgments
on our part.  We believe that the following represent the critical
accounting policies of Simtek as described in Financial Reporting Release No.
60, Cautionary Advice Regarding Disclosure About Critical Accounting Policies,
which was issued by the Securities and Exchange Commission: inventories;
deferred income taxes; allowance for doubtful accounts; stock based
compensation; and allowance for sales returns.  The
valuation of inventories involves complex judgments on our part.  Excess
finished goods inventories are a natural component of market demand for
semiconductor devices.  We continually evaluate and balance the levels of
inventories based on sales projections, current orders scheduled for future
delivery and historical product demand.  While certain finished goods items
will sell out, quantities of other finished goods items will remain.  These
finished goods are reserved as excess inventory.  We believe we have
adequate controls with respect to the amount of finished goods inventories that
are anticipated to become excess.  While we believe this process produces a
fair valuation of inventories, changes in general economic conditions of the
semiconductor industry could materially affect valuation of our inventories.  The
allowance for doubtful accounts reflects a reserve that reduces customer
accounts receivable to the net amount estimated to be collectible.
 Estimating the credit worthiness of customers and the recoverability of
customer accounts requires management to exercise considerable judgment.
 In estimating uncollectible amounts, we consider factors such as industry
specific economic conditions, historical customer performance and anticipated
customer performance.  While we believe our processes to be adequate to
effectively quantify our exposure to doubtful accounts, changes in industry or
specific customer conditions may require us to adjust our allowance for doubtful
accounts.  17 __________________________________________________________________________________________________________  SIMTEK CORPORATION    We
record an allowance for sales returns as a net adjustment to revenue and
customer accounts receivable.  The allowance for sales returns consists of
two separate segments, distributor stock rotation and distributor price
reductions.  When we record the allowance, the net method reduces customer
accounts receivables and gross sales.  Generally, we calculate the stock
rotation portion of the allowance based upon historical credits issued for
actual stock rotation returns from our distributors.  The agreements we
have with certain of our distributors generally allow them to return inventory
to us up to 5% percent of their purchases every 6 months, in exchange for
inventory that better meets their demands.  At times, with our approval,
our distributors reduce the selling price of a specific device in order to meet
competition related to a specific end customer program, which we support through
a credit back to the distributor for that specific program.  The actual
amount of the credit issued is based on historical credits issued to
distributors.  This allowance is based on approved pricing changes,
inventory affected and historical data.  We believe that our processes are
adequate to reasonably predict and estimate the allowance for sales returns.  We
record an allowance that directly relates to the warranty of our products for
one year.  The allowance for warranty return reduces our gross sales. This
allowance is calculated by looking at annual revenue and historical rates of our
products returned due to warranty issues.  While we believe this process
adequately predicts our allowance for warranty returns, changes in the
manufacturing or design of our product could materially affect valuation of our
warranty reserve.  We
assess the impairment of long-lived assets when events or changes in
circumstances indicate that the carrying value of the assets may not be
recoverable.  Factors that we consider in deciding when to perform an
impairment review include significant under-performance of the business in
relation to expectations, significant negative industry or economic trends, and
significant changes or planned changes in our use of the assets.
 Recoverability of assets that will continue to be used in our operations
is measured by comparing the carrying amount of the assets to our estimate of
the related future net cash flows.  If the assets carrying amount is not
recoverable through the related future cash flows, the asset is considered to be
impaired.  The impairment is measured by the difference between the assets
carrying amount and its fair value, based on the best information available,
including market prices or discounted cash flows.  Goodwill
represents the excess of the purchase price over the fair value of identifiable
net tangible and intangible assets acquired in the acquisition of the nvSRAM
assets from ZMD. Goodwill is required to be tested for impairment annually. We
performed goodwill impairment testing as of December 31, 2007 and as of June 30,
2008 we determined that no impairment existed at that date. This assessment
requires estimates of future revenue, operating results and cash flows, as well
as estimates of critical valuation inputs such as discount rates, terminal
values and similar data. We will continue to perform annual impairment analyses
of goodwill. As a result of such impairment analyses, impairment charges may be
recorded and may have a material adverse impact on our financial position and
operating results. Additionally, we may make strategic business decisions in
future periods which impact the fair value of goodwill, which could result in
significant impairment charges. There can be no assurance that future goodwill
impairments will not occur. Effective
January 1, 2006, we adopted the fair value recognition provisions of SFAS
No. 123(R), "Share-Based Payments." Under the fair value recognition
provisions of SFAS No. 123(R), we recognize stock-based compensation net of
an estimated forfeiture rate and only recognize compensation cost for those
shares expected to vest over the requisite service period of the awards.
Determining the appropriate fair value model and calculating the fair value of
share-based payment awards require the input of highly subjective assumptions,
including the expected life of the share-based payment awards and stock price
volatility. The assumptions used in calculating the fair value of share-based
payment awards represent management's best estimates, but these estimates
involve inherent uncertainties and the application of management judgment. As a
result, if factors change and we use different assumptions, our stock-based
compensation expense could be materially different in the future. In addition,
we are required to estimate the expected forfeiture rate and only recognize
expense for those shares expected to vest. If our actual forfeiture rate is
materially different from our estimate, our future stock-based compensation
expense could be significantly different from what we have recorded.  18 __________________________________________________________________________________________________________  SIMTEK CORPORATION   We
have recorded a valuation allowance for the full amount $9,227,000 for deferred
tax assets, which principally relate to future utilization of net operating
losses.  Future operations may change our estimate in connection with
potential utilization of these assets.  Results of
Operations:  Revenues  Total
revenue for the three and six months ended June 30, 2008 was $7,519,000 and
$14,834,000, respectively, as compared to $8,082,000 and $15,949,000 for the
same periods in 2007.  The
following table sets forth our net product revenues for semiconductor devices by
product markets for the three and six months ended June 30, 2008 and 2007 (in
thousands):  Three Months Ended June 30,

Six Months Ended June 30,2008
2007
Variance

2008
2007
VarianceCommercial
$
  6,936
$
  7,179
$
   (243)

$ 13,702
$ 14,643
$
   (941)High-end
industrial and military
$
     583
$
     903
$
   (320)

$
  1,132
$
  1,306
$
   (174)Total
Semiconductor Revenue
$
  7,519
$
  8,082
$
   (563)

$
  14,834
$ 15,949
$
(1,115)   Commercial
revenues include revenue generated from our 0.8-micron products built from
silicon wafers received from Chartered Semiconductor or purchased as finished
units from ZMD, and from our 0.25-micron products built from silicon wafers
received from Dongbu HiTek (DBH).  Commercial revenues decreased by
$243,000 for the three months ended June 30, 2008 as compared to the three
months ended June 30, 2007.  Commercial revenues decreased by $941,000 for
the six months ended June 30, 2008 as compared to the same period in 2007.
 The decreases in the 2008 period primarily reflect the impact of final
shipments in 2007 of parts formerly purchased from ZMD that are no longer
supported by Simtek.  These parts were manufactured to automotive industry
certifications that Simtek does not have and therefore Simtek could not service
that customer demand.  High-end
industrial and military product revenues accounted for decreases of $320,000 and
$174,000 for the three and six months ended June 30, 2008, respectively, as
compared to the same period in 2008.  The decrease reflects a lower demand
for these products.  Customer demand for these devices is generally not
predictable and tends to be volatile from period to period.  One
distributor and two direct customers together accounted for approximately 56% of
our revenue for the three months ended June 30, 2008 and one distributor and two
direct customers accounted for approximately 58% of our revenue for the six
months ended June 30, 2008.  Our customers often include Contract
Manufacturers  (CMs), principally located in Asia, who contract with
Original Equipment Manufacturers (OEMs) to implement our products into systems
designed by the OEMs.  In many cases, we negotiate prices directly with the
OEMs, but actually receive orders from, and ship parts to, the CMs.
 Generally, the CMs contract with multiple OEMs.  Thus, sales to any
one CM may represent eventual implementation of our products with multiple OEMs.
 Products sold to distributors are sold without material recourse.
 Distributors sell our products to various end customers.  If our
leading distributor were to terminate its relationship with us, we believe that
there would not be a material impact on our product sales, as we believe that we
would be able to service the various end customers through other
distributors.  19 __________________________________________________________________________________________________________  SIMTEK CORPORATION    Cost of Sales and
Gross Profit  We
recorded cost of sales of $4,075,000 and $8,240,000 for the three and six months
ended June 30, 2008, respectively as compared to $3,859,000 and $8,294,000 for
the comparable periods in 2007.  Actual product gross margin percentages
for the three and six months ended June 30, 2008  were 46% and 44%,
respectively, as compared to gross margin percentages of 52% and 48% for the
same periods in 2007.   This decrease reflects higher costs related to
lower yields on certain silicon wafers used to produce our 1 megabit products in
the 2008 periods as well as lower sales volume of high-end industrial and
military parts which typically have much higher gross margins.  Research and
Development  Continued
investments in new product development are required for us to remain competitive
in the markets we serve and to grow our revenue.  In the first six months
of 2008, our research and development department continued its efforts on the
final development of our new nvSRAM product family in conjunction with Cypress.
 This new product family is based on Cypress 0.13-micron S8 process and
includes memory densities up to and beyond 4-megabits.  In addition, in
2007, we began initial development of a new product initiative to develop very
high density nvRAM devices in our AgigA majority-owned subsidiary.  As part
of this new initiative, we opened a design center in Poway, California.
 Expenses incurred for the high density nvRAM initiave were $766,000 and
$1,377,000 for the three and six months ended June 30, 2008, respectively, as
compared to $248,000 and $334,000 for the three and six months ended June 30,
2007, respectively.  Total
research and development expenses were $3,254,000 and $5,903,000 for the three
and six months ended June 30, 2008, respectively, as compared to $2,560,000 and
$4,173,000 for the comparable periods in 2007.  The
increase of $694,000 for the three month period ended June 30, 2008 compared to
the three month period ended June 30, 2007 was primarily due to (i) an increase
of expenses of $518,000 related to the high density nvRAM development
initiative; and, (ii) write-off of $550,000 for .25 micron silicon wafers used
for the 256 kilo-bit product which were not usable because of design changes
that were required.  These increases were partially offset by lower
milestone payments to Cypress related to the 130 nanometer process development
of $386,000.  The
increase of $1,730,000 for the six months ended June 30, 2008 compared to the
same period in 2007 was due to several items, including (i) an increase of
expenses of $1,043,000 related to the high density nvRAM development initiative;
(ii) write-off of $550,000 for .25 micron silicon wafers discussed above; (iii)
increases in equipment related costs of $57,000, (iv) increases in travel
expenses of $100,000, (v) increases in legal expenses of $68,000 and (vi)
increases in stock compensation expenses of approximately $150,000.  These
increases were partially offset by the lower milestone payments to Cypress of
$386,000 discussed above.   20 __________________________________________________________________________________________________________  SIMTEK CORPORATION   Administration  Total
administration expenses were $1,515,000 and $2,890,000 for the three and six
months ended June 30, 2008, respectively, as compared to $1,190,000 and
$2,299,000 for the same periods in 2007.  On
August 1, 2008, we entered into the Merger Agreement with Cypress and Merger
Sub.  Pursuant to the Merger Agreement, Cypress has agreed to promptly
commence a tender offer to purchase all outstanding Shares, in exchange for
$2.60 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in an Offer to Purchase and a related Letter of Transmittal
that will be distributed to our stockholders by Cypress.   In
connection with the Merger Agreement, we have incurred expenses directly
associated with the potential transaction of approximately $706,000 and $760,000
in the three and six month periods ended June 30, 2008, respectively.  The
expenses include costs incurred for legal, investment banking and other advisors
and these costs are included in administration expenses.  On August 4,
2008, we filed a Current Report on Form 8-K with the Securities and Exchange
Commission which includes the details of the proposed transaction.  The
$325,000 increase for the three month period ended June 30, 2008 compared to the
three month period ended June 30, 2007 was due primarily to the costs recorded
related to the transaction with Cypress discussed above.  These increases
were partially offset by decreases in professional and consulting services of
$100,000.  The increase in legal fees were directly related to the
potential acquisition of us by Cypress as discussed in Note 10 to the financial
statements.  The
$590,000 increase for the six month period ended June 30, 2008 compared to the
six month period ended June 30, 2007 was due primarily to the costs recorded
related to the potential transaction with Cypress discussed above.  Sales and
Marketing  Total
sales and marketing expenses were $1,292,000 and $2,822,000 for the three and
six months ended June 30, 2008, respectively, as compared to $1,248,000 and
$2,400,000 for the same periods in 2007.  The
$44,000 increase for the three month period ended June 30, 2008 compared to the
three month period ended June 30, 2007 was primarily due to increases in payroll
and related expenses of $109,000, advertising expenses of $45,000 and stock
compensation expense of $31,000.  These increases were partially offset by
decreases in sales commissions of $88,000, travel expenses of $31,000 and
miscellaneous other expense of $22,000.  The
$422,000 increase for the six month period ended June 30, 2008 compared to the
six month period ended June 30, 2007 was primarily due to increases in payroll
related expenses of $297,000, advertising expenses of $74,000, contact services
of $78,000 and stock compensation expense of $52,000.  These increases were
partially offset by a decrease in sales commissions of $36,000 and other
miscellaneous expenses of $43,000.  The
increases in payroll related expenses and contract services were primarily due
to changes in sales and marketing personnel.  The decreases in sales
commission were a direct result of lower sales.  Net Loss  We
recorded net losses of $2,671,000 and $5,124,000 for the three and six months
ended June 30, 2008, respectively, as compared to net losses of $816,000 and
$1,306,000 for the same periods in 2007.  The increase of $1,855,000 and
$3,818,000 for the three and six month periods reflects a decrease in revenue
and expense items discussed above.  21 __________________________________________________________________________________________________________  SIMTEK CORPORATION    Liquidity and
Capital Resources  As
of June 30, 2008, we had net working capital of $6,701,000 as compared to net
working capital of $11,858,000 as of December 31, 2007.  In the condensed
consolidated balance sheet as of June 30, 2008, the entire outstanding balance
of $2,100,000 for the convertible debentures was classified as a current
liability based on the final maturity date of June 28, 2009.  Cash
flows used in operating activities for the six months ended June 30, 2008 were
$1,119,000 compared to $1,120,000 in the same period in 2007.  While the
cash flows used in operating activities is similar for the two periods, the
details are significantly different.   The following table shows the
components of each item in operating activities (amounts in thousands):  Six months ended2008

2007Net loss
$
        (5,124)

$          (1,306)Depreciation
and amortization
425

344Expense related
to stock compensation
803

544Amortization of
non-competition agreement
890

890Net allowance
accounts
(82)

78Changes in
assets and liabilities(Increase)
decrease in:Accounts
receivable
550

771Inventory
1,113

(1,119)Prepaid
expenses and other
192

(375)Increase
(decrease) in:Accounts
payable
(301)

(1,235)Accrued
expenses
415

288Net cash used
in operating activities
$
(1,119)

$
(1,120)   Excluding
the effect of changes in assets and liabilities, cash used in operating
activities was $3,087,000 in the six-month period ended June 30, 2008 compared
to cash generated by operating activities of $550,000 in the same period in
2007.  This increase was primarily due to the higher net loss in the
six-month period ending June 30, 2008 compared to same period in 2007.
   The decrease in accounts receivable for the six-months ending
June 30, 2008 and 2007 is due to lower seasonal revenue in the first six months
of each fiscal year compared to the fourth quarter of each previous year.
 The decrease in inventory for the six months ended June 30, 2008 is
primarily due to lower inventory balances resulting from our continuing efforts
improve inventory management and the write-off of the .25 micron wafers
discussed above.  Cash
flows used in investing activities increased for the six months ended June 30,
2008 by approximately $208,000 as compared to the same period in 2007. The
increase was primarily due to the purchase of test equipment.  The
decrease of $109,000 in cash flows provided by financing activities for the six
months ended June 30, 2008 as compared to the same period in 2007 was primarily
due to the receipt of funds related to the exercise of warrants that occurred in
the six months ending June 30, 2007, for which there were no comparable items in
the same period in 2008.  22 __________________________________________________________________________________________________________  SIMTEK CORPORATION    Short-term
liquidity.  Our
unrestricted cash balance at June 30, 2008 was $2,649,000.  As
discussed above, we have entered into the Merger Agreement with Cypress and
Merger Sub.  In the event that the transactions contemplated by the Merger
Agreement are not consummated, it is likely that we will need to raise capital
to pay for the costs incurred related to the transaction as well as to fund
ongoing product development (including the high density RAM initiative).
 However, we cannot assure you that we would be able to raise sufficient
capital.   23 __________________________________________________________________________________________________________  SIMTEK CORPORATION    ITEM
3
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Not applicable.  ITEM
4
CONTROLS AND
PROCEDURES  Not applicable.  ITEM
4T
CONTROLS AND
PROCEDURES  (a) Evaluation of
Disclosure Controls and Procedures.  The
Company maintains disclosure controls and procedures, as such term is defined
in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to
ensure that information required to be disclosed by us in reports that we file
or submit under the Exchange Act is recorded, processed, summarized, and
reported within the time periods specified in Securities and Exchange Commission
rules and forms, and that such information is accumulated and communicated to
our management, including our Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required
disclosure. In designing and evaluating our disclosure controls and procedures,
management recognized that disclosure controls and procedures, no matter how
well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the disclosure controls and procedures are met.
Additionally, in designing disclosure controls and procedures, our management
necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible disclosure controls and procedures. The design of any
disclosure controls and procedures also is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions.  Based
on their evaluation as of the end of the period covered by this Quarterly Report
on Form 10-Q and subject to the foregoing, our Chief Executive Officer and Chief
Financial Officer have concluded that our disclosure controls and procedures
were effective.  (b) Changes in
Internal Control over Financial Reporting.  There
were no material changes in our internal control over financial reporting that
occurred during the second quarter of fiscal 2008 that has materially affected,
or is reasonably likely to materially affect, our internal control over
financial reporting.   24 __________________________________________________________________________________________________________  SIMTEK CORPORATION    PART
II. OTHER INFORMATION  Item
1. Legal
Proceedings None  Item 1A. Risk Factors
 None  Item
2. Unregistered
Sales of Equity Securities and Use of Proceeds  None  Item
3. Defaults
upon Senior Securities - None  Item
4. Submission
of Matters to a Vote of Security Holders  On June 19, 2008, the
Company held its 2008 Annual Meeting of the Shareholders (the Annual Meeting).
 Set forth below are the results of the votes taken at the Annual Meeting.
 The Companys shareholders voted on two matters at the Annual Meeting.
 Those two matters were the re-election of five directors and the
ratification of the selection of Hein & Associates LLP as the Companys
independent auditors for fiscal year 2008.  (i) The following
individuals were elected directors of the Company for terms expiring in 2009:  Name of
Director
For
WithheldHarold
Blomquist
11,318,500
1,418,373Robert
Pearson
12,403,956
332,917Alfred
Stein
12,400,440
336,433John
Hillyard
12,416,421
320,452Phillip
Black
12,416,421
320,452  (ii) Ratification of
the Selection of Hein & Associates LLP as the Independent Auditors for
Fiscal Year 2008:  For
Against
Abstain12,586,111
33,121
117,641   Item
5. Other
Information - None  Item
6. Exhibits   31.1
Certification
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Principal
Executive Officer31.2
Certification
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Principal
Financial Officer32.1
Certification
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Principal
Executive Officer32.2
Certification
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Principal
Financial Officer  25 _________________________________________________________________________________________________  SIMTEK CORPORATION   SIGNATURES   Pursuant to the
requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.   SIMTEK
CORPORATION
(Registrant)Date:
August 14, 2008

By:
/s/ Harold
BlomquistHAROLD
BLOMQUISTChief Executive
Officer and PresidentDate:
August 14, 2008

By:
/s/ Brian
AllemanBRIAN
ALLEMANChief Financial
Officer                    26