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 Quarter ended June 30, 2006
                                       OR
[ ]  Transition report pursuant to section 13  or 15 (d) of the Securities
     Exchange Act of 1934


                         Commission file number 0-19027



                               SIMTEK CORPORATION
             (Exact name of registrant as specified in its charter)
                -------------------------------------------------



         Colorado                                      84-1057605
(State or other jurisdiction                (I.R.S. Employer Identification No.)
of incorporation or organization)



                        4250 Buckingham Drive, Suite 100,
                        Colorado Springs, Colorado 80907
               (Address of principal executive offices) (Zip Code)


                                 (719) 531-9444

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check
one):

Large Accelerated
Filer [ ]                 Accelerated Filer [ ]        Non-accelerated Filer [X]

Indicate 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 10, 2006 was 148,763,192.



<PAGE>


                               SIMTEK CORPORATION

                                      INDEX
                  Form 10-Q For the Quarter Ended June 30, 2006

PART 1. FINANCIAL INFORMATION

     ITEM 1                                                                 Page
                                                                            ----
          Condensed Consolidated Balance Sheets as of June 30, 2006
          and December 31, 2005                                               3

          Condensed Consolidated Statements of Operations for the
          three months and six months ended June 30, 2006 and 2005            4

          Condensed Consolidated Statements of Cash Flows for the
          six months ended June 30, 2006 and 2005                             5

          Notes to Condensed Consolidated Financial Statements             6-13

     ITEM 2

          Management's Discussion and Analysis of Financial
          Condition and Results of Operations                                14

     ITEM 3
          Quantitative and Qualitative Disclosures about Market Risk         22

     ITEM 4
          Controls and Procedures                                            23

PART 2. OTHER INFORMATION

    ITEM 1       Legal Proceedings                                           24

    ITEM 1A      Risk Factors                                                24

    ITEM 2       Unregistered Sales of Equity Securities
                 and Use of Proceeds                                         24

    ITEM 3       Defaults Upon Senior Securities                             24

    ITEM 4       Submission of Matters to a Vote of Security Holders         24

    ITEM 5       Other Information                                           24

    ITEM 6       Exhibits                                                    24

SIGNATURES                                                                   25




                                       2
<PAGE>
<TABLE>
<CAPTION>


                                                SIMTEK CORPORATION
                                       CONSDENSED CONSOLIDATED BALANCE SHEETS
                             (Amounts in thousands, except par value and share amounts)

                                     ASSETS
                                                                             June 30, 2006       December 31, 2005
                                                                             -------------       -----------------
                                                                              (Unaudited)
<S>                                                                             <C>                  <C>
CURRENT ASSETS:

     Cash and cash equivalents                                                  $  2,265             $  1,766
     Restricted investments                                                        1,975                2,281
     Accounts receivable - trade, net                                              3,955                1,456
     Inventory, net                                                                3,979                2,068
     Prepaid expenses and other current assets                                       387                   99
     Deposits                                                                         --                  600
                                                                                --------             --------
         Total current assets                                                     12,561                8,270
EQUIPMENT AND FURNITURE, net                                                         803                  571
DEFERRED FINANCING COSTS AND DEBT ISSUANCE COSTS                                     143                  111
GOODWILL                                                                             992                  876
NON-COMPETITION AGREEMENT                                                          8,016                8,910
OTHER ASSETS                                                                          43                   20
                                                                                --------             --------
     TOTAL ASSETS                                                               $ 22,558             $ 18,758
                                                                                ========             ========
                       LIABILITES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
     Accounts payable                                                           $  4,539             $  2,822
     Accrued expenses                                                              1,157                1,419
     Accrued vacation payable                                                        200                  145
     Accrued wages                                                                   282                   40
     Obligation under capital leases                                                  --                   13
     Notes payable                                                                   558                   --
     Debentures, current                                                             480                  240
                                                                                --------             --------
         Total current liabilities                                                 7,216                4,679
DEBENTURES, NET OF CURRENT                                                         2,520                2,760
                                                                                --------             --------
     Total liabilities                                                             9,736                7,439
Temporary equity, consisted of 68,750,000 shares of common stock,
     $0.01 par value, subject to cash penalties under registration rights
     agreements, net of financing costs of $668                                   10,332                8,459
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
     Preferred stock, $1.00 par value; 2,000,000 shares authorized,
         none issued                                                                  --                   --
     Common stock, $.01 par value; 300,000,000 shares authorized,
         78,581,577 and 78,571,577 shares issued and outstanding at June 30,
         2006 and 78,170,823 and 78,160,823 shares issued and outstanding at
         December 31, 2005, excluding temporary
         equity                                                                      786                  782
     Additional paid-in capital                                                   50,187               48,282
     Treasury stock, at cost; 10,000 shares                                          (13)                 (13)
     Accumulated deficit                                                         (48,545)             (46,191)
     Accumulated other comprehensive income:
         Cumulative translation adjustment                                            75                   --
                                                                                --------             --------
         Total shareholders' equity                                                2,490                2,860
                                                                                --------             --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                      $ 22,558             $ 18,758
                                                                                ========             ========


                The accompanying notes are an integral part of these financial statements.
</TABLE>

                                                      3
<PAGE>
<TABLE>
<CAPTION>

                                                 SIMTEK CORPORATION
                                     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                     (Unaudited)
                                (Amounts in thousands, except share and per share amounts)


                                                           Three Months Ended June 30,                Six Months Ended June 30,
                                                       -----------------------------------        ----------------------------------
                                                            2006                 2005                 2006                2005
                                                            ----                 ----                 ----                ----
<S>                                                    <C>                  <C>                  <C>                  <C>
REVENUE:
     Product sales, net                                $       6,443        $       2,204        $      11,186        $       5,180
     Royalty revenue                                             483                   --                1,518                   --
                                                       -------------        -------------        -------------        -------------
         Total revenue                                         6,926                2,204               12,704                5,180
     Cost of sales                                             4,567                1,675                8,037                3,683
                                                       -------------        -------------        -------------        -------------

GROSS PROFIT                                                   2,359                  529                4,667                1,497

OPERATING EXPENSES:
     Research and development costs                            1,682                1,917                3,227                3,126
     Sales and marketing                                       1,038                  444                1,983                  844
     General and administrative                                1,059                  987                1,757                1,274
                                                       -------------        -------------        -------------        -------------
           Total operating expenses                            3,779                3,348                6,967                5,244
                                                       -------------        -------------        -------------        -------------
LOSS FROM CONTINUING OPERATIONS                               (1,420)              (2,819)              (2,300)              (3,747)

OTHER INCOME (EXPENSE):
     Interest income                                              36                    7                   76                   12
     Interest expense                                            (74)                 (57)                (134)                (114)
     Other expense                                                 5                   --                    4                   (1)
                                                       -------------        -------------        -------------        -------------

           Total other expense                                   (33)                 (50)                 (54)                (103)
                                                       -------------        -------------        -------------        -------------

LOSS FROM CONTINUING OPERATIONS
     BEFORE PROVISION FOR INCOME TAXES                        (1,453)              (2,869)              (2,354)              (3,850)
     Provision for income taxes                                   --                   --                   --                   --
                                                       -------------        -------------        -------------        -------------
LOSS FROM CONTINUING OPERATIONS                               (1,453)              (2,869)              (2,354)              (3,850)
LOSS FROM DISCONTINUED OPERATIONS                                 --                  (36)                  --                  (68)
                                                       -------------        -------------        -------------        -------------
NET LOSS                                               $      (1,453)       $      (2,905)       $      (2,354)       $      (3,918)
                                                       =============        =============        =============        =============

NET LOSS PER COMMON SHARE:
     Basic and diluted
     Loss from continuing operations                   $        (.01)       $        (.05)       $        (.02)       $        (.06)
     Loss from discontinued operations                          (.00)                (.00)                (.00)                (.00)
                                                       -------------        -------------        -------------        -------------
     Total                                             $        (.01)       $        (.05)       $        (.02)       $        (.06)
                                                       =============        =============        =============        =============

WEIGHTED AVERAGE COMMON SHARES
 OUTSTANDING:
     Basic and diluted                                   147,044,131           63,226,984          147,044,131           65,299,377
                                                       =============        =============        =============        =============


                        The accompanying notes are an integral part of these financial statements.
</TABLE>

                                                              4

<PAGE>
<TABLE>
<CAPTION>


                                          SIMTEK CORPORATION
                            CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                              (unaudited)
                                        (Amounts in thousands)

                                                                                      Six Months Ended June 30,
                                                                                      -------------------------
                                                                                        2006             2005
                                                                                        ----             ----
<S>                                                                                   <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                                                                         $(2,354)         $(3,918)
     Income from discontinued operations                                                   --               68
     Adjustments to reconcile net loss to net cash used in operating
         Activities:
         Depreciation and amortization                                                    219              216
         Expense related to stock options                                                 278               --
         Issuance of common stock per compensation
              agreements                                                                   53              139
         Amortization of non-competition agreement                                        894               --
         Net change in allowance accounts                                                 428              170
         Deferred financing fees                                                           21               10
         Changes in assets and liabilities:
          (Increase) decrease in:
              Accounts receivable                                                      (2,530)           1,439
              Inventory                                                                (2,345)             388
              Prepaid expenses and other                                                  294              257
          Increase (decrease) in:
              Accounts payable                                                          1,704             (509)
              Accrued expenses                                                            658              573
                                                                                      -------          -------
         Net cash used in operating activities of continuing operations                (2,680)          (1,167)
         Net cash used in operating activities of discontinued operations                  --             (234)
                                                                                      -------          -------
         Net cash used in operating activities                                         (2,680)          (1,401)
CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of equipment and furniture, net                                            (448)            (201)
     Purchase of certain assets from ZMD                                                 (116)              --
                                                                                      -------          -------
     Net cash used in investing activities of continuing operations                      (564)            (201)
     Net cash used in investing activities of discontinued operations                      --              (35)
                                                                                      -------          -------
     Net cash used in investing activities                                               (564)            (236)
CASH FLOWS FROM FINANCING ACTIVITIES:
     Payments on capital lease obligation                                                 (13)             (25)
     Funds received from December 2005 equity financing, net                            1,874               --
     Warrants issued for license rights                                                 1,478               --
     Equity financing, net                                                                 --            3,945
     Transfer to restricted investment                                                     --           (3,000)
     Proceeds from sale of common stock                                                    --              108
     Payments from restricted investment                                                  306               --
     Exercise of stock options                                                             47              183
                                                                                      -------          -------
         Net cash provided by financing activities                                      3,692            1,211
                                                                                      -------          -------
Effect of exchange rate changes on cash                                                    51               --
                                                                                      -------          -------
NET CHANGE IN CASH AND CASH EQUIVALENTS                                                   499             (426)
CASH AND CASH EQUIVALENTS, beginning of period                                          1,766            2,147
                                                                                      -------          -------
CASH AND CASH EQUIVALENTS, end of period                                              $ 2,265          $ 1,721
                                                                                      =======          =======
Cash Paid for interest                                                                $   121          $   114
                                                                                      =======          =======
Warrants issued for debt issuance cost                                                $    53          $    --
                                                                                      =======          =======


                The accompanying notes are an integral part of these financial statements.
</TABLE>

                                                      5


<PAGE>



                               SIMTEK CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.   Basis of Presentation

     The consolidated financial statements include the accounts of Simtek and
its wholly 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 and Annual Report and Form 10-K/A for Simtek Corporation ("Simtek" or the
"Company") filed on April 7, 2006 and April 28, 2006, respectively for fiscal
year 2005.

     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
     ------------------------

     Effective January 1, 2006, the Company adopted the fair value recognition
provisions of Statement of Financial Accounting Standard 123(R) "Share-Based
Payment" ("SFAS 123(R)") using the modified prospective transition method. In
addition, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 107 "Share-Based Payment" ("SAB 107") in March, 2005, which
provides supplemental SFAS 123(R) application guidance based on the views of the
SEC. Under the modified prospective transition method, compensation cost
recognized in the three and six month periods ending June 30, 2006 includes: (a)
compensation cost for all share-based payments granted prior to, but not yet
vested as of January 1, 2006, based on the grant date fair value estimated in
accordance with the original provisions of SFAS No. 123, and (b) compensation
cost for all share-based payments granted beginning January 1, 2006, based on
the grant date fair value estimated in accordance with the provisions of SFAS
123(R). In accordance with the modified prospective transition method, results
for prior periods have not been restated.

     The adoption of SFAS 123(R) resulted in stock compensation expense for the
three months and six months ended June 30, 2006 of $159,000 and $278,000,
respectively to loss from continuing operations and loss before income taxes.
The Company did not recognize a tax benefit from the stock compensation expense
because the Company considers it is more likely than not that the related
deferred tax assets, which have been reduced by a full valuation allowance, will
not be realized. The following table summarizes the effects of the share-based
compensation resulting from the application of SFAS No. 123(R) to options
granted under the Company's stock option plan.
<TABLE>
<CAPTION>

                                                                  Three Months               Six Months
                                                                        Ended                   Ended
                                                                  June 30, 2006             June 30, 2006
                                                                  -------------             -------------

<S>                                                                  <C>                       <C>
(In thousands except per share amounts)
Research and development                                             $      47                 $      86
Sales and marketing                                                         23                        39
General and administrative                                                  89                       153
                                                                     ---------                 ---------
Share-based compensation effect on loss from continuing
     operations before provision for income taxes                    $     159                 $     278
Provision for income taxes                                                   -                         -
                                                                     ---------                 ---------
Net share-based compensation effects on net loss                     $     159                 $     278
                                                                     =========                 =========

Share-based compensation effects on basic and diluted loss
     per common share                                                $       -                 $     .01
                                                                     =========                 =========
Share-based compensation effects on cash flow from
     operations                                                      $     159                 $     278
                                                                     =========                 =========
</TABLE>
                                       6
<PAGE>



                               SIMTEK CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


     The Black-Scholes option-pricing model was used to estimate the option fair
values. The option-pricing model requires a number of assumptions, of which the
most significant are expected stock price volatility and the expected option
term (the amount of time from the grant date until the options are exercised or
expire). Expected volatility was calculated based upon actual historical stock
price movements over the most recent periods ending June 30, 2006 equal to the
expected option term. In accordance with SFAS No. 123(R), the Company adjusts
share-based compensation on a quarterly basis for changes to the estimate of
expected forfeitures based on actual forfeiture experience. The effect of
adjusting the forfeiture rate for all expense amortization after January 1, 2006
is recognized in the period the forfeiture estimate is changed. The effect of
forfeiture adjustments in the three and six months ended June 30, 2006 was
insignificant. The expected option term was calculated using the "simplified"
method permitted by SAB 107.

     SFAS 123(R) requires tax benefits resulting from tax deductions in excess
of the compensation cost recognized for those options ("excess tax benefits") to
be classified and reported as both an operating cash outflow and a financing
cash inflow upon adoption of SFAS 123(R). As discussed in Note 7 - Taxes from
the Company's report on Form 10-K for the period ending December 31, 2005, as a
result of the Company's net operating losses, the excess tax benefits that would
otherwise be available to reduce income taxes payable have the effect of
increasing the Company's net operating loss carry forwards. Accordingly, because
the Company is not able to realize these excess tax benefits, such benefits have
not been recognized in the condensed statement of cash flow for the six months
ended June 30, 2006.

Pro-Forma Stock Compensation Expense for the three and six months Ended June 30,
2005

     Prior to January 1, 2006, as permitted under the SFAS No. 123, Accounting
for Stock-Based Compensation, the Company accounted for its stock-based
compensation in accordance with the provisions of Accounting Principles Board
(APB) Opinion No. 25, Accounting for Stock Issued to Employees. As such,
compensation expense was recorded on the date of grant if the current market
price of the underlying stock exceeded the exercise price. Certain pro forma net
loss and EPS disclosures for employee stock option grants are included below as
if the fair value method as defined in SFAS No. 123 had been applied.
Transactions in equity instruments with non-employees for goods or services are
accounted for by the fair value method. Had compensation cost been determined
based on the fair value at the grant dates for awards under employee stock based
compensation plans consistent with the fair value method for the three and six
months ending June 30, 2005, the Company's net loss and EPS would have been
increased to the pro forma amounts indicated below.
<TABLE>
<CAPTION>
                                                                    Three Months        Six Months
                                                                   Ended June 30,     Ended June 30,
                                                                   --------------     --------------
                                                                        2005               2005
                                                                        ----               ----
<S>                                                                   <C>                <C>
(In thousands except per share amounts)
Net loss as reported                                                  $(2,905)           $(3,918)
     Add: Stock based compensation included in reported
     Net loss                                                              --                 --
     Deduct: Fair value of stock based compensation                      (373)              (746)
                                                                      -------            -------
     Proforma net loss                                                $(3,278)           $(4,664)
                                                                      =======            =======

Net loss as reported - basic and diluted                              $  (.05)           $  (.06)
Proforma net loss - basic and diluted                                 $  (.06)           $  (.07)
</TABLE>


                                       7
<PAGE>



                               SIMTEK CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


     In accordance with the modified prospective transition method of SFAS
123(R), the prior comparative quarterly results have not been restated.

Stock Options as of the three and six month periods ended June 30, 2006

     The Company adopted a Non-Qualified Stock Option Plan in 1994, as amended,
that authorizes 20,600,000 non-qualified stock options that may be granted to
directors, employees, and consultants. The plan permits the issuance of
non-statutory options and provides 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 plans are 10 years and options granted
to employees expire three months after the termination of employment. In 2004,
the Non-Qualified Stock Option Plan was extended for 10 more years.

     The following table summarizes stock options outstanding and changes during
the six months ended June 30, 2006:
<TABLE>
<CAPTION>

                                                                                   Outstanding Options
                                                                 -----------------------------------------------------------
                                                                                                    Weighted
                                                                                                    Average
                                                                                                   Remaining
                                                                                    Weighted      Contractual     Aggregate
                                                                   Number           Average           Term        Intrinsic
                                                                 of Shares       Exercise Price    (in years)      Value(1)
                                                                 ---------       --------------   ------------    ----------
<S>                                                              <C>                 <C>              <C>            <C>
Options outstanding at January 1, 2006........................   7,969,363           $0.62
  Granted.....................................................   3,560,850            0.32
  Exercised...................................................    (272,020)          (0.17)                          $ 45

  Cancelled or forfeited......................................    (311,779)          (0.96)
                                                                ----------           -----
Options outstanding at June 30, 2006..........................  10,946,414           $0.52            3.869
                                                                ==========           =====            =====
Options exercisable at June 30, 2006..........................   5,204,992           $0.65            3.869
                                                                ==========           =====            =====
</TABLE>


(1)  Represents the difference between the exercise price and the value of
     Simtek stock at the time of exercise.

Stock options outstanding and currently exercisable at June30, 2006 are as
follows:
<TABLE>
<CAPTION>

                           Outstanding                                                 Exercisable
------------------------------------------------------------------            ------------------------------
                                   Weighted Average
                      --------------------------------------------

                                           Remaining          Weighted                          Weighted
                         Number         Contractual Life       Average          Number           Average
Exercise Price        Outstanding          in Months        Exercise Price    Exercisable     Exercise Price
--------------        -----------       ----------------    --------------    -----------    ---------------
<S>                  <C>                      <C>              <C>            <C>                 <C>
$0.14-$0.35           3,677,239               45               $  0.29           907,275          $ 0.22

$0.365-$0.60          3,987,716               53               $  0.44         1,716,560          $ 0.45

$0.62-$0.90           2,234,125               56               $  0.66         1,533,823          $ 0.66

$1.125-$1.50            822,334               29               $  1.24           822,334          $ 1.24

$1.53-$1.90             225,000               57               $  1.78           225,000          $ 1.78
                        -------                                                ---------
                     10,946,414                                                5,204,992
                     ==========                                                =========
</TABLE>

                                       8
<PAGE>



                               SIMTEK CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


     Total estimated unrecognized compensation cost from unvested stock options
as of June 30, 2006 was approximately $1.5 million, which is expected to be
recognized over the next four years.

     The weighted average per share fair value of stock options granted during
the three months ending June 30, 2006 and 2005 were $0.34 and $0.59,
respectively. The weighted average per share fair value stock options granted
during the six months ending June 30, 2006 and 2005 were $0.32 and $0.60,
respectively. The fair value was estimated as of the grant date using the
Black-Scholes option pricing model with the following assumptions:
<TABLE>
<CAPTION>
                                           Three Months Ended                  Six Months Ended
                                                June 30,                           June 30,
                                           2006           2005                2006         2005
                                           -------------------                -----------------
     <S>                                   <C>            <C>                 <C>          <C>
     Volatility                            79.05%         84.70%              80.97%       83.80%
     Expected option term                  5 years        4 years             4.67 years   4 years
     Risk-free interest rate               4.92%          3.70%               4.81%        3.60%
     Expected dividend yield                 0%             0%                  0%           0%
</TABLE>

     Modifications of Stock Options Granted
     --------------------------------------

     In May 2005, the Company accelerated vesting of certain unvested and
out-of-the-money stock options previously awarded to employees and officers.
Because the price of the Company's common stock was $0.57 on the day of
acceleration, the options, which are exercisable at $0.62 and above, had no
economic value on the date of acceleration. As a result of the acceleration,
options to purchase approximately 1.7 million shares of Simtek common stock are
now exercisable. Options held by non-employee directors were excluded from the
vesting acceleration.

     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 $894,000 to sales and marketing for the six months ended June 30,
2006.

     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, 2006 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, 2006, the Company recorded
approximately $75,000 in comprehensive income.



                                       9
<PAGE>



                               SIMTEK CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


2.   Liquidity


     During the three and six months ended June 30, 2006 and the twelve months
ended December 31, 2005, the Company incurred net losses from continuing
operations of approximately $1,453,000, $2,354,000 and $5,785,000, respectively
and has an accumulated deficit of $48,545,000 as of June 30, 2006. The Company
was also not in compliance with its debentures throughout 2005 and the first six
months of 2006, but was successful in obtaining waivers through July 1, 2007
from the debenture holders. The Company has working capital of approximately
$5,345,000 as of June 30, 2006.

     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 profitable operations in the near term,
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 favorable
to the Company.

3.   Recent Accounting Pronouncements

     In February 2006, the FASB issued SFAS No. 155, Accounting for Certain
Hybrid Financial Instruments ("SFAS 155"), which amends SFAS No. 133, Accounting
for Derivative Instruments and Hedging Activities and SFAS No. 140, Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities. SFAS 155 simplifies the accounting for certain derivatives embedded
in other financial instruments by allowing them to be accounted for as a whole
if the holder elects to account for the whole instrument on a fair value basis.
The statement also clarifies and amends certain other provisions of SFAS No. 133
and SFAS No. 140. SFAS 155 is effective for all financial instruments acquired,
issued, or subject to a remeasurement event occurring in fiscal years beginning
after September 15, 2006. We do not expect the adoption of SFAS 155 to have an
impact on our results of operations or financial condition.

4.   Revenue Recognition

     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 or Dresden, Germany),
including distributors. Based on historic business with the majority of the
Company's customers and, in the case of new customers, the Company is reasonably
assured that collectibility 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 a price protection in the event of changes in the
Company's product price. 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 on the actual inventory value of the Company's semiconductor products held
by its distributors. 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.
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.

     Revenue from royalties related to non-refundable prepaid royalty payments
is recognized upon receipt. Revenue from royalties related to sales of products
by license partners is recognized upon the notification to us of shipment of
product from the Company's technology license partners to direct customers.



                                       10
<PAGE>



                               SIMTEK CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


5.   Inventories

     The Company records inventory using the lower of cost (first-in, first-out)
or market. Inventory at June 30, 2006 and December 31, 2005 included:

                                             June 30, 2006    December 31, 2005

     (In thousands)
     Raw Materials                             $     57           $      33
     Work in progress                             3,012               1,096
     Finished Goods                               1,473               1,056
                                               --------           ---------
                                                  4,542               2,185
     Less reserves for excess inventory            (563)               (117)
                                               --------           ---------
                                               $  3,979           $   2,068
                                               ========           =========


6.   Notes Payable

     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 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 has a term of two years, but may be terminated
at any time by the Company upon 60 days' written notice. As of June 30, 2006,
the Company had financed receivables with Wells Fargo for approximately
$558,000.

7.   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 BFSUS 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 $0.312 per share, which
was in excess of the market price per share on July 1, 2002. At March 31, 2006,
the Company was not in compliance with two of the covenants set forth in the
loan agreement. In order to obtain a waiver for the covenants, the Company
issued the debenture holders a total of 50,000 warrants for receipt of the
waiver. Through June 30, 2006, the Company was not in compliance with two of the
covenants set forth in the loan agreement. These covenants relate to the
interest coverage ratio and debt to equity ratio. On August 10, 2006, the
Company received a waiver for the two covenants through July 1, 2007. However,
significant variances in future actual operations from the Company's current
estimates could result in the reclassification of this note to current
liabilities. The Convertible Debentures allows 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
$0.312. This occurred in December 2005 in connection with the common stock sale
of $11,000,000 at a price of $0.16 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 $0.22 per share. Based on the conversion
rate of $0.22 per share, each RENN investment fund is entitled to 4,545,455
shares upon conversion.



                                       11
<PAGE>



                               SIMTEK CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


     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. The original terms of the debentures
required the Company to make monthly principal payments of $10 per $1,000 of the
then remaining principal amount, beginning on June 28, 2005. The Company will
still be required to make interest payments. Under the terms of the waiver,
monthly principal payments of $13.33 per $1,000 of the then remaining
outstanding principal amount were to commence on July 1, 2006. The final
maturity date remains as June 28, 2009. As consideration for the extension, the
Company has issued to the debenture holders warrants to purchase 200,000 shares
of Simtek common stock at $0.50 per share, a premium to the market price on the
date of the waiver. The Company estimated the value of the warrants at the time
of grant, using the Black Scholes option-pricing model, to be approximately
$62,000. The Company recognized $8,000 as additional interest expense for the
six months ending June 30, 2006. On July 24, 2006, each of the debenture holders
converted $100,000 of the amount due into 454,545 shares of the Company's common
stock in lieu of the Company making the principal payment it was required to
make on July 1, 2006.

8.   Non-Refundable Prepaid Royalties

     On March 24, 2006, the Company entered into a License and Development
Agreement with 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 has 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 and $1 million was paid on
June 30, 2006 and $1 million will be paid on December 31, 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 20 million shares of the
Company's common stock for $0.75 per share. The warrants have a ten year life.
The warrants will be issued upon receipt of each of the prepaid royalty amounts.
As of June 30, 2006, the Company had received $3,000,000 from Cypress in
pre-paid royalties, in exchange for which the Company has issued warrants to
purchase 15 million shares of common stock. The value of the warrants issued of
$1,482,000 was determined by an independent valuation firm and has been recorded
as an increase in additional paid in capital. The net balance of the
non-refundable prepaid royalties of $1,035,000 for the March 31, 2006 payment
and $483,000 for the June 30, 2006 payment were recognized as revenue at the
time the payments were received.

9.   Geographic Concentration

     Sales of the Company's semiconductor products by location for the three
month and six month periods ended June 30, 2006 and 2005 were as follows:

                          Three Months Ended                 Six Months Ended
                                June 30,                         June 30,
                          -----------------                ------------------
                           2006        2005                2006          2005
                           ----        ----                ----          ----

     United States           18%        24%                   19%          26%
     Europe                  29%        21%                   29%          19%
     Far East                42%        42%                   43%          44%
     All Others              11%        13%                    9%          11%
                            ----       ----                  ----         ----
                            100%       100%                  100%         100%
                            ====       ====                  ====         ====



                                       12
<PAGE>



                               SIMTEK CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


10.  Accumulated Other Comprehensive Income (Loss)

     Accumulated other comprehensive income (loss) net of tax is as follows:


                                                 Foreign Currency
                                               Translation Adjustment

     Balance at January 1, 2006                     $       -
     Current period change                                 75
                                                    ---------
     Balance June 30, 2006                          $      75
                                                    =========

11.  Discontinued Operation

     On August 30, 2005, the Company, along with the Company's wholly-owned
subsidiary, Q-DOT, Inc. ("Q-DOT"), entered into an Asset Purchase Agreement with
Hittite Microwave Corporation ("Hittite") and a wholly-owned subsidiary of
Hittite, HMC Acquisition Corporation ("HMC Acquisition"), whereby substantially
all of the assets of Q-DOT were sold to HMC Acquisition in exchange for a cash
payment of approximately $2.2 million. The Company realized a net gain of
approximately $1,687,000. In addition, Hittite assumed certain future
obligations of Q-DOT, including obligations related to Q-DOT's real estate lease
and certain software license agreements. Incident to the Asset Purchase
Agreement, the parties also entered an Escrow Agreement, whereby $200,000 of the
purchase price was placed in escrow for one year to secure certain
indemnification obligations of Simtek and Q-DOT. In addition, the parties
entered into a Confidentiality, Non-Disclosure and Restrictive Covenant
Agreement, whereby, among other things, Simtek and Q-DOT agreed not to compete
against Hittite and HMC Acquisition for a period of four years with respect to
certain businesses relating to Q-DOT's operations.

     In accordance with SFAS No. 144, the consolidated financial statements of
the Company have been recast to present this business as a discontinued
operation. Accordingly, the revenues, the costs and expenses and assets and
liabilities of the discontinued operation have been excluded from the respective
captions in the accompanying Consolidated Statements of Operations and
Consolidated Balance Sheets. In addition, certain of the Notes to the
Consolidated Financial Statements have been recast for all periods to reflect
the discontinuance of this operation.
































                                       13
<PAGE>


                               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, revenues and expenses and the related disclosures. Our
accounting policies are discussed in Note 1 of the Notes to Consolidated
Financial Statements included in our 2005 Form 10-K. 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; and, allowance for sales
returns.

     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 or Dresden, Germany), including distributors. Based
on historic business with the majority of our customers and, in the case of new
customers, we are reasonably assured that collectibility on our shipments will
occur.

     Revenue from royalties related to non-refundable prepaid royalty payments
is recognized upon receipt. Revenue from royalties related to sales of products
by license partners is recognized upon the notification to us of shipment of
product from out technology license partners to direct customers.

     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.



                                       14
<PAGE>
                               SIMTEK CORPORATION


     We record an allowance for sales returns as a net adjustment to 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 actual reported distributor inventory levels. The contracts we have
with certain of our distributors generally allow them to return to us 5% percent
of their inventory every 6 months, in exchange for inventory that better meets
their demands. At times, 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. When this occurs, we record an allowance for potential credit that our
distributors will be requesting. This allowance is based on approved pricing
changes, inventory affected and historical data. We believe that our processes
to adequately predict our allowance for sales returns are effective in
quantifying our exposures due to industry or specific customer conditions.

     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 revenues 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
warranties.

     The valuation of inventories involves complex judgments on our part. Excess
finished goods inventories are a natural component of market demand of
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.

     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
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.
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 periodic and
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.

     We have recorded a valuation allowance on deferred tax assets. Future
operations may change our estimate in connection with potential utilization of
these assets.



                                       15
<PAGE>
                               SIMTEK CORPORATION


Overview

     Total revenue for the three and six months ended June 30, 2006 was $6.9
million and $12.7 million, respectively, including $.5 million and $1.5 million
of royalty revenue for the three and six months, respectively. Total unit
shipments of our semiconductor memory products increased in both the three and
six month periods compared to the 2005 periods. Our net product revenue was
$6,443,000 and $11,186,000 for the three and six months ended June 30, 2006,
respectively, up from $2,204,000 and $5,180,000 for the comparable periods of
2006, an approximate 192% and 115% increase, respectively. This increase was due
primarily to increased product demand and the addition of revenue from customers
previously serviced by ZMD prior to the acquisition of the nvSRAM product line
from ZMD in December 2005.

     Increased operating expenses had an impact on our profitability for the
three and six months ended June 30, 2006 compared to the three and six months
ended June 30, 2005. The increase in operating expenses includes non-cash
charges of $446,000 and $894,000 for amortization of the non-compete agreement
with ZMD and $159,000 and $278,000 for expenses related to employee stock
options, for the three and six months ended June 30, 2006, respectively.
Operating expenses also included first-time operating expenses of $269,000 and
$494,000 for our European subsidiary, Simtek GmbH, for the three and six months
ended June 30, 2006, respectively.

Results of Operations:

     Revenues

         The following table sets forth our net revenues for semiconductor
devices by product markets for the three and six months ended June 30, 2006 and
2005 (in thousands):
<TABLE>
<CAPTION>

                                           Three Months Ended                      Six Months Ended
                                                June 30,                               June 30,
                                      ----------------------------          -----------------------------
                                       2006       2005     Variance          2006        2005    Variance
                                       ----       ----     --------          ----        ----    --------
     <S>                              <C>       <C>        <C>            <C>         <C>         <C>
     Commercial                       $ 6,032   $ 1,810    $ 4,222        $ 9,983     $ 4,217     $ 5,766
     High-end industrial and
      military                            411       394    $    17        $ 1,203     $   963     $   240
                                      -------   -------    -------        -------     -------     -------
     Total Semiconductor
      Revenue                         $ 6,443   $ 2,204    $ 4,239        $11,186     $ 5,180     $ 6,006
                                       ======   =======    =======        =======     =======     =======
</TABLE>

     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 Electronics (DBE). Commercial revenues increased by
$4,222,000 and $5,766,000 for the three and six months ended June 30, 2006 as
compared to the three and six months ended June 30, 2005. As stated previously,
this increase was due primarily to increased unit demand and the addition of
revenue from customers previously serviced by ZMD prior to the acquisition of
the nvSRAM product line from ZMD in December 2005.

     High-end industrial and military product revenues accounted for an increase
of approximately $17,000 and $240,000 for the three and six months ended June
30, 2006 as compared to the same period in 2005. The increase was due to the
addition of new customer demand for our products and increased pricing to
certain of our customers for industrial and military products.



                                       16
<PAGE>
                               SIMTEK CORPORATION



The following table sets forth the unit volumes for each period in thousands of
units:
<TABLE>
<CAPTION>

                                           Three Months Ended                      Six Months Ended
                                                June 30,                               June 30,
                                      ----------------------------          -----------------------------
                                       2006       2005     Variance          2006        2005    Variance
                                       ----       ----     --------          ----        ----    --------
     <S>                              <C>       <C>        <C>            <C>         <C>         <C>

         0.8 micron 256K devices       1,421      337      1,084          2,525        746        1,779
         0.25 micron devices              69       17         52             91         35           56
         Other devices                   441      188        253            718        405          313
                                      ------    -----     ------         ------     ------       ------

         Total Units                   1,931      542      1,389          3,334      1,186        2,148
                                      ======    =====     ======         ======     ======       ======
</TABLE>

     Two distributors accounted for approximately 24% and 26% of our revenue for
the three and six months ended June 30, 2006, respectively. Products sold to
distributors are sold without material recourse. Distributors sell our products
to various end customers. If one of these distributors was 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 these various
end customers through other distributors.


Cost of Sales and Gross Profit

     We recorded cost of sales of $4,567,000 and $8,037,000 for the three and
six months ended June 30, 2006, respectively as compared to $1,675,000 and
$3,683,000 for the comparable periods in 2005. The resulting product gross
margin percentages for the three and six months ended June 30, 2006 were 29% and
28%, respectively and 24% and 29% for the three and six months ended June 30,
2005, respectively. The overall improvement in gross margin percentages is due
to; (i) increased volume; (ii) higher overall average selling prices; and (iii)
cost reductions in the 1 megabit device. We expect to see gross margins increase
in the next several quarters, as average selling prices continue to increase,
unit costs for all 0.25 micron devices continues to be reduced, and the benefits
of moving final test operations offshore to more cost effective locations. In
fact, in June 2006, we successfully transferred final testing of our highest
volume devices to the Philippines and expect to see the cost benefit in the
third quarter of 2006.

Research and Development

     In order to maintain our growth, we must continue to invest in new product
development and to increase the percentage of the overall nvRAM market that our
products serve. In July 2006, we completed full qualification of the 1 megabit
device with real time clock and the 0.25 micron 256 kilobit device both with and
without the real time clock feature. Thus all of our 0.25 micron based products
are fully qualified. We anticipate that we will continue to invest in the next
several months in continued cost reductions, yield enhancements, and back end
test efficiencies.

     In May 2005, we began joint development of our next generation nvSRAM
product family, in conjunction with Cypress, pursuant to the terms of the May 5,
2005 development agreement. This new product family will be based on Cypress'
0.13-micron "S8" process and we expect it will include memory densities up to
and beyond 4-megabits. In the first half of 2006 we achieved our third major
milestone under the development agreement, as scheduled. For the three months
and six months ended June 30, 2006, we recognized expenses related to the
Cypress development of $328,000 and $642,000, respectively. In 2005, the expense
was $49,000 for both periods.

         As part of our strategic product development activities, on March 24,
2006, Simtek entered into a License and Development Agreement with Cypress which
expands the agreement the two companies signed in May 2005. Under the terms of
the new agreement:



                                       17
<PAGE>
                               SIMTEK CORPORATION



     o    Cypress will retain the right to include nvSRAM functionality on
          future programmable system-on-chip (PSoC(TM)) and customized
          integrated circuits originally granted in the May 2005 agreement, and
          now with clearly defined royalty payments to Simtek for the use of its
          SONOS-based nvSRAM intellectual property;

     o    Simtek is granted the right to use certain intellectual property of
          Cypress in developing future generation nvSRAM products, including the
          jointly developed 0.13u SONOS-based CMOS process, advanced SRAM
          intellectual property, design-related intellectual property,
          design-for-manufacturability know-how and other intellectual property
          related to Cypress' advanced CMOS manufacturing processes and
          procedures;

     o    Simtek and Cypress agree to broad manufacturing support terms that
          will provide Simtek with a range of industry-leading manufacturing
          skills and know-how to enable cost-effective manufacturing of
          leading-edge SONOS nvSRAMs;

     o    Simtek and Cypress will extend the deployment of Simtek's proprietary
          nvSRAM technology, and work to establish SONOS as the preferred
          technology for high reliability, high endurance, and scaleable
          non-volatile products at 65nm and below;

     o    Simtek and Cypress will jointly develop and market a family of
          products utilizing Simtek's patented SONOS-based non-volatile
          technology for production using Cypress's advanced manufacturing
          processes.

     Upon signing the agreement, Simtek received $2 million from Cypress. Simtek
also received an additional payment of $1 million on June 30, 2006 and will
receive an additional payment of $1 million on December 31, 2006. The agreement
also calls for Simtek to issue warrants to Cypress to purchase a total of 20
million shares of its common stock, 10 million of which were already issued upon
the execution of the agreement, 5 million of which were issued on June 30, 2006
upon the payment by Cypress of certain royalties and 5 million of which are
expected to be issued on December 31, 2006 upon the payment by Cypress of
certain royalties. The warrants have, or will have, an exercise price of $0.75
per share. Simtek believes that this new agreement will accelerate the timing of
expanding nvSRAM adoption in new markets and shorten future product development
cycle time. Please read Note 8 to the Condensed Consolidated Financial
Statements for a discussion of the accounting treatment for the transactions
related to this agreement.

     Total research and development expenses were $1,682,000 and $3,227,000 for
the three and six months ended June 30, 2006, respectively, as compared to
$1,917,000 and $3,126,000 for the three and six months ended June 30, 2005,
respectively.

     The $235,000 decrease for the three month period was due to primarily a
decrease in product development costs of $736,000 which was offset by increases
in costs related to the joint development with Cypress discussed previously;
additional payroll related costs of $248,000, including the engineering staff at
Simtek GmbH and expenses related to stock options; and increased travel of
$43,000 for engineers traveling to and from Simtek GmbH. The decrease in product
development costs was due to the one-time charge related to our .25 micron
product that we recorded in the three month period ending June 30, 2005.

     The $101,000 increase for the six month period was primarily due to a
decrease of $720,000 for the charges related to the development of our 25
micron product as discussed above and a decrease of $112,000 related to leased
software expense. These decreases were partially offset by increases in payroll
related costs of $319,000, travel of $58,000 and $593,000 in costs related to
the co-development with Cypress.



                                       18
<PAGE>
                               SIMTEK CORPORATION


General and Administration

     Total general and administration expenses were $1,059,000 and $1,757,000
for the three and six months ended June 30, 2006, respectively, as compared to
$987,000 and $1,274,000, respectively, for the same periods in 2005.

     The $72,000 increase for the three month period was primarily due to
increases in payroll related costs of $327,000, accounting and legal expenses of
$86,000, contract services of $114,000, travel of $32,000 and other
miscellaneous expenses of $41,000. These increases were offset by a decrease in
one-time costs related to separation and employment agreements of $527,000 that
were recorded in the three months ending June 30, 2005. The increases in audit
and legal expenses and contract services were primarily related to costs
incurred for our annual shareholder meeting, and securities work. The increase
in payroll related costs were related to increased headcount in both of our
Colorado Springs and Germany offices and expenses related to stock option
grants.

     The $483,000 increase for the six month period was primarily due to
increases of $586,000 in payroll related costs, $174,000 in legal and audit
fees, contract services of $116,000, travel of $76,000, bad debt expense of
$25,000 and other miscellaneous expenses of $24,000. The increases were
partially offset by a decrease of $517,000 in one-time costs related to
separation and employment agreements that were incurred in the first six months
of 2005. The increases in legal and audit fees and contract services were
primarily related to expenses related to our shareholder meeting, securities
work and fees associated with the license agreement entered into with Cypress in
March 2006. The increases in payroll and payroll overhead costs were due to
increased headcount in both of our Colorado Springs and Germany offices and for
the expenses related to stock option grants.

Sales and Marketing

     Total sales and marketing expenses were $1,038,000 and $1,983,000 for the
three and six months ended June 30, 2006, respectively, as compared to $444,000
and $844,000, respectively, for the same periods in 2005.

     The $594,000 and $1,139,000 increases for the three and six month periods
were due to the amortization of the non-compete agreement discussed in Note 1 to
the Condensed Consolidated Financial Statements, increase in payroll related
costs and an increase in sales commissions. The increase in payroll related
costs were directly related to increased headcount and the increase in sales
commissions was related to the higher revenue.

Loss from Continuing Operations

     We recorded a net loss, from continuing operations, of $1,453,000 and
$2,354,000 for the three and six months ended June 30, 2006, respectively, as
compared to $2,869,000 and $3,850,000 for the three and six months ended June
30, 2005, respectively. The decreases of $1,416,000 and $1,496 for the three and
six month periods reflect the revenue and expense items discussed above.

Liquidity and Capital Resources

     As of June 30, 2006, we had a net working capital of $5,345,000 as compared
to a net working capital of $3,591,000 as of December 31, 2005.

     As discussed previously, on March 24, 2006, we entered into a License and
Development Agreement with Cypress pursuant to which, among other things,
Cypress has agreed to license certain intellectual property from us to develop
and manufacture standard, custom, and embedded nvSRAM products. Cypress agreed



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<PAGE>
                               SIMTEK CORPORATION


to pay to Simtek royalties across all products they develop and sell which
include intellectual property licensed from Simtek. We agreed to license from
Cypress certain of their intellectual property for use in our design efforts. We
agreed with Cypress to co-develop certain nvSRAM products and Cypress has agreed
to pay us $4 million in nonrefundable prepaid royalties, $2 million of which was
received at the time the contract was executed. On June 30, 2006, we received
the second installment of $1,000,000 and the remaining $1 million is scheduled
to be paid on December 31, 2006. In addition, we agreed with Cypress to work
together to develop new products and processes. Please read Note 8 to the
Condensed Consolidated Financial Statements for a discussion of the accounting
treatment for the transactions related to this agreement.

         Cash flows used in operating activities for the six months ended June
30, 2006 were $2,680,000 compared to $1,239,000 in the same period in 2005, an
increase of $1,441,000. The net increase is primarily due to investment in
working capital to support revenue growth. The key components of the cash (uses)
and sources in working capital are as follows, in thousands of dollars:

                                  Six Months Ended June 30,
                               2006         2005        Change
                            ---------    ---------    ----------
Accounts receivable         $ (2,530)    $  1,439     $ (3,969)

Inventory                   $ (2,345)    $    388     $ (2,733)

Accounts payable            $  1,704     $   (509)    $  2,213

The increase in working capital was partially off set by the reduction in net
loss for the 2006 period of $2.4 million from $3.9 million in the 2005 period
and the amortization of the non-compete agreement in 2006 of $0.9 million.

     Cash flows used in investing activities increased for the six months ended
June 30, 2006 by approximately $360,000 as compared to the same period in 2005.
The increase was primarily the result of the purchase of equipment and furniture
for our facility in Germany and test equipment for our research and development.

     The increase of $3,692,000 in cash flows provided by financing activities
was primarily due to the receipt of funds related to the sale of common stock
completed on December 30, 2005, for which some funds were received on January 3,
2006 and the value assigned to the warrants issued to Cypress under the
License and Development Agreement.

Short-term liquidity.

     Our unrestricted cash balance at June 30, 2006 was $2,265,000.

     Our future liquidity will depend on our revenue growth and our ability to
sell our products at positive gross margins and control of our operating
expenses. Through December 31, 2006, we expect to spend approximately
$9,000,000, for operating expenses assuming revenue growth. We expect to meet
these cash needs from sales revenues, the funds still due to us from Cypress
under the License and Development Agreement and, to the extent we do not have
sufficient revenues, from our existing cash reserves and credit facility with
Wells Fargo.




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<PAGE>
                                SIMTEK CORPORATION


  Long-term liquidity.

     The Company has experienced significant revenue growth over the six months
ended June 30, 2006 and expects that growth trend to continue for the
foreseeable future. The time period from when we pay for our silicon wafers to
when we get paid by our customers can be as long as six months. Thus we need to
invest in inventory well in advance of receipt of payment from customers. If
revenue continues to grow at a significant rate, we may need to raise additional
capital to support that growth. While we currently have no specific plans to do
so, such additional capital may include expansion of our credit facility,
additional senior debt, or a private placement or public offering of our equity.














































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<PAGE>

                               SIMTEK CORPORATION


ITEM 3   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Market risk represents the risk of loss that may impact our financial
position, results of operations or cash flows due to adverse changes in
financial and commodity market prices and rates. We are exposed to market risk
in the areas of changes in United States interest rates and changes in foreign
currency exchange rates as measured against the United States dollar. These
exposures are directly related to our normal operating activities. We currently
have no derivative financial instruments.

     Interest payable on our convertible debentures is fixed at 7.5% over the
term of the debentures. As such, changes in interest rates will not affect
future expenses or cash flows.

     We manage interest income by investing our excess cash in cash equivalents
bearing variable interest rates, which are tied to various market indices. We do
not believe that near-term changes in interest rates will result in a material
effect on future earnings, fair values or cash flows.

     We do not speculate in the foreign exchange market and do not manage
exposures that arise in the normal course of business related to fluctuations in
foreign currency exchange rates by entering into offsetting positions through
the use of foreign exchange forward contracts.

     Average selling prices of our products have not increased significantly as
a result of inflation during the past several years, primarily due to intense
competition within the semiconductor industry. The effect of inflation on our
costs of production has been minimized through improvements in production
efficiencies. We anticipate that these factors will continue to minimize the
effects of any foreseeable inflation and other price pressures within the
industry and markets in which we participate.



























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<PAGE>
                               SIMTEK CORPORATION



ITEM 4   CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures.

Harold Blomquist, who serves as the Company's chief executive officer, and Brian
Alleman, who serves as the Company's chief financial officer, after evaluating
the effectiveness of the Company's disclosure controls and procedures as of the
end of the period covered by this quarterly report (the "Evaluation Date")
concluded that as of the Evaluation Date, the Company's disclosure controls and
procedures were effective to ensure that information required to be disclosed by
the Company in reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported as specified in the SEC's rules and
forms and to ensure that information required to be disclosed by the Company in
reports that it files or submits under the Exchange Act is accumulated and
communicated to our management to allow timely decisions regarding required
disclosure.

(b) Changes in internal control over financial reporting.

There were no changes in the Company's internal control over financial reporting
during the three months ended June 30, 2006, that have materially affected, or
are reasonably likely to materially affect, internal control over financial
reporting.

































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<PAGE>

                               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

On May 26, 2006, Simtek issued to the following individuals, who are directors
of Simtek, as compensation for serving as directors of Simtek under Simtek's
standard compensation arrangement for directors, the following amounts of shares
of Simtek common stock: Robert Keeley (33,757); Alfred Stein (33,757); Ronald
Sartore (33,757); Robert Pearson (33,757); and Harold Blomquist (3,706), which
shares, due to the nature of such issuances, were granted to the above-listed
directors in reliance upon the exemption from registration pursuant to Section
4(2) of the Securities Act of 1933, as amended. On May 26, 2006, Simtek issued
to Renaissance Capital Growth and Income Fund III, Inc., Renaissance US Growth
Investment Trust PLC and BFSUS Special Opportunities Trust PLC warrants to
purchase a total of 200,000 shares of Simtek common stock, which warrants were
granted in exchange for the agreement by such funds to subordinate to Wells
Fargo their first priority security interest in Simtek's assets in connection
with the $3.6 million revolving line of credit entered into by Simtek with Wells
Fargo Bank on June 2, 2006. Also on May 26, 2006, Simtek issued to Renaissance
Capital Growth and Income Fund III, Inc., Renaissance US Growth Investment Trust
PLC and BFSUS Special Opportunities Trust PLC warrants to purchase a total of
50,000 shares of Simtek common stock, which warrants were granted in exchange
for the agreement by such funds to waive compliance by Simtek with certain
covenants of the 7.5% convertible debentures. The May 26, 2006 warrants, which
have an exercise price of $0.33 per share and a term of five years, were issued
in reliance upon the exemption from registration pursuant to Section 4(2) of the
Securities Act of 1933, as amended, as each of such funds is an accredited
investor, there was no general solicitation and each of such funds had access to
material information of Simtek.

Item 3.  Defaults upon Senior Securities - None

Item 4. Submission of Matters to a Vote of Security Holders.

We held our annual meeting of shareholders on June 29, 2006, the results of
which we reported in a Current Report on Form 8-K filed on July 10, 2006, which
Form 8-K is incorporated by reference herein.

Item 5.  Other Information - None

Item 6.  Exhibits

         10.1       Employment Agreement, dated April 25, 2006, by and between
                    the Company and Brian P. Alleman, incorporated by reference
                    to the Company's Current Report on Form 8-K filed by the
                    Company with the SEC on May 1, 2006.

         10.2       Preliminary agreement between the Company and Ronald
                    Sartore, incorporated by reference to the Company's Current
                    Report on Form 8-K filed by the Company with the SEC on May
                    30, 2006.

         10.3       Account Purchase Agreement, effective June 2, 2006, by and
                    between the Company and Wells Fargo Bank, National
                    Association, acting through its Wells Fargo Business Credit
                    operating division, incorporated by reference to the
                    Company's Current Report on Form 8-K filed by the Company
                    with the SEC on June 8, 2006.

         31.1       Certification pursuant to Section 302 of the Sarbanes-Oxley
                    Act of 2002 of Principal Executive Officer

         31.2       Certification pursuant to Section 302 of the Sarbanes-Oxley
                    Act of 2002 of Principal Financial Officer

         32.1       Certification pursuant to Section 906 of the Sarbanes-Oxley
                    Act of 2002 of Principal Executive Officer

         32.2       Certification pursuant to Section 906 of the Sarbanes-Oxley
                    Act of 2002 of Principal Financial Officer


                                       24
<PAGE>



                                   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)



August 11, 2006                    By: /s/Harold Blomquist
                                       -----------------------------------------
                                       HAROLD BLOMQUIST
                                       Chief Executive Officer, President




August 11, 2006                    By: /s/Brian Alleman
                                       -----------------------------------------
                                       BRIAN ALLEMAN
                                       Chief Financial Officer





































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