UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-Q/A

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

(Mark One)

[X]      Quarterly report pursuant to section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the Quarter ended March 31, 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 an accelerated filer (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 3, 2006 was 148,763,192.



<PAGE>

                                Explanatory Note

We are filing this Amendment No. 1 on Form 10-Q/A to Simtek Corporation's
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2006,
which was originally filed with the Securities and Exchange Commission (the
"SEC") on May 15, 2006 (the "Original Form 10-Q") to reflect that Simtek has
determined that it is appropriate to recognize the non-refundable advance
royalty payments under its License and Development Agreement, dated March 26,
2006, with Cypress Semiconductor Corporation ("Cypress") as royalty revenue upon
receipt from Cypress. Therefore, this Form 10-Q/A restates Simtek's consolidated
financial statements as of and for the three months ended March 31, 2006 such
that total revenue for such three month period is reported as $5,778,000
($1,035,000 more than the $4,743,000 reported in the Original Form 10-Q), net
loss for such three months period is reported as $901,000 (rather than the
$1,936,000 reported in the Original Form 10-Q), total liabilities are reduced
from $8,430,000 (as reported in the Original Form 10-Q) to $7,395,000,
accumulated deficit is reduced from $48,127,000 (as reported in the Original
Form 10-Q) to $47,092,000, and total shareholders' equity is increased from
$2,008,000 (as reported in the Original Form 10-Q) to $3,043,000. We decided to
amend and restate after management and the audit committee of the Board of
Directors discussed with our independent registered public accounting firm the
recognition of such non-refundable advance royalty payments. We concluded that
our financial statements for the three months ended March 31, 2006 should be
restated.

Part I of this Form 10-Q/A contains more information about the restatement in
"Note 2. Change in Accounting Principle," which accompanies the condensed
consolidated financial statements in Item 1.

This Form 10-Q/A speaks as of March 31, 2006, and except as noted herein, we
have not materially modified or updated the disclosures herein for events that
occurred at a later date. Events occurring after the date of the Original Form
10-Q, and other disclosures necessary to reflect subsequent events, have been
addressed, in accordance with applicable disclosure requirements, in our Form
8-Ks filed after March 31, 2006 will be addressed, in accordance with applicable
disclosure requirements, in our Form 10-Q for the three months ended June 30,
2006.













                                       2
<PAGE>


                               SIMTEK CORPORATION

                                      INDEX

                      For the Quarter Ended March 31, 2006

PART 1. FINANCIAL INFORMATION

    ITEM 1                                                                 Page
                                                                           ----
         Condensed Consolidated Balance Sheets as of March 31, 2006
         and December 31, 2005                                                4

         Condensed Consolidated Statements of Operations for the
         three months ended March 31, 2006 and 2005                           5

         Condensed Consolidated Statements of Cash Flows for the
         three months ended March 31, 2006 and 2005                           6

         Notes to Condensed Consolidated Financial Statements              7-14

    ITEM 2
         Managements Discussion and Analysis of Financial Condition
         and Results of Operations                                           15

    ITEM 3
         Quantitative and Qualitative Disclosures about Market Risk          21

    ITEM 4
         Controls and Procedures                                             22

PART 2. OTHER INFORMATION

    ITEM 1       Legal Proceedings                                           23

    ITEM 2       Unregistered Sales of Equity Securities and Use
                 of Proceeds                                                 23

    ITEM 3       Defaults Upon Senior Securities                             23

    ITEM 4       Submission of Matters to a Vote of Security Holders         23

    ITEM 5       Other Information                                           23

    ITEM 6       Exhibits and Reports on Form 8-K                            23

SIGNATURES                                                                   24












                                       3
<PAGE>
<TABLE>
<CAPTION>



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

                                                     ASSETS
                                                     ------
                                                                             March 31, 2006      December 31, 2005
                                                                             --------------      -----------------
                                                                             (As Restated)
                                                                              (Unaudited)
<S>                                                                             <C>                   <C>
CURRENT ASSETS:
     Cash and cash equivalents                                                  $  2,814              $  1,766
     Restricted investments                                                        2,281                 2,281
     Accounts receivable - trade, net                                              2,854                 1,456
     Inventory, net                                                                2,572                 2,068
     Prepaid expenses and other current assets                                       115                    99
     Deposits                                                                         --                   600
                                                                                --------              --------
         Total current assets                                                     10,636                 8,270
EQUIPMENT AND FURNITURE, net                                                         621                   571
DEFERRED FINANCING COSTS AND DEBT ISSUANCE COSTS                                     103                   111
GOODWILL                                                                             914                   876
NON-COMPETITION AGREEMENT                                                          8,459                 8,910
OTHER ASSETS                                                                          37                    20
                                                                                --------              --------
     TOTAL ASSETS                                                               $ 20,770              $ 18,758
                                                                                ========              ========

                                          LIABILITES AND SHAREHOLDERS' EQUITY
                                          -----------------------------------

CURRENT LIABILITIES:
     Accounts payable                                                           $  3,049              $  2,822
     Accrued expenses                                                              1,022                 1,419
     Accrued vacation payable                                                        172                   145
     Accrued wages                                                                   152                    40
     Obligation under capital leases                                                  --                    13
     Debentures, current                                                             360                   240
                                                                                --------              --------
         Total current liabilities                                                 4,755                 4,679
DEBENTURES, NET OF CURRENT                                                         2,640                 2,760
                                                                                --------              --------
     Total liabilities                                                             7,395                 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 $667,542                               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,
         78,170,823 and 78,160,823 shares issued and outstanding
         at March 31, 2006 and December 31, 2005, excluding
         temporary equity                                                            782                   782
     Additional paid-in capital                                                   49,366                48,282
     Treasury stock, at cost; 10,000 shares                                          (13)                  (13)
     Accumulated deficit                                                         (47,092)              (46,191)
     Accumulated other comprehensive income:
         Cumulative translation adjustment                                            --                    --
                                                                                --------              --------
         Total shareholders' equity                                                3,043                 2,860
                                                                                --------              --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                      $ 20,770              $ 18,758
                                                                                ========              ========


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


                                                 4

<PAGE>
<TABLE>
<CAPTION>


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

                                                                         For the three months ended March 31,
                                                                         ------------------------------------
                                                                            2006                       2005
                                                                            ----                       ----
                                                                       (As Restated)
<S>                                                                   <C>                          <C>
REVENUE
     Product sales, net                                               $       4,743                $       2,976
     Royalty revenue                                                          1,035                           --
                                                                      -------------                -------------
                  Total Revenue                                               5,778                        2,976

     Cost of sales                                                            3,470                        2,071
                                                                      -------------                -------------

GROSS PROFIT                                                                  2,308                          905

OPERATING EXPENSES:
     Research and development costs                                           1,545                        1,145
     Sales and marketing                                                        944                          401
     General and administrative                                                 699                          293
                                                                      -------------                -------------

                  Total operating expenses                                    3,188                        1,839
                                                                      -------------                -------------

LOSS FROM OPERATIONS                                                           (880)                        (934)

OTHER INCOME (EXPENSE):
     Interest income                                                             40                            5
     Interest expense                                                           (60)                         (57)
     Other expense                                                               (1)                          (1)
                                                                      -------------                -------------

                  Total other expense                                           (21)                         (53)
                                                                      -------------                -------------

LOSS FROM CONTINUING OPERATIONS
     BEFORE PROVISION FOR INCOME TAXES                                         (901)                        (987)

     Provision for income taxes                                                  --                           --
                                                                      -------------                -------------

LOSS FROM CONTINUING OPERATIONS                                                (901)                        (987)

LOSS FROM DISCONTINUED OPERATIONS                                                --                          (26)
                                                                      -------------                -------------

NET LOSS                                                              $        (901)               $      (1,013)
                                                                      =============                =============

NET LOSS PER COMMON SHARE:
         Basic and diluted
     Loss from continuing operations                                  $        (.01)               $        (.02)
     Loss from discontinued operations                                $          --                $          --
                                                                      -------------                -------------
     Total                                                            $        (.01)               $        (.02)
                                                                      =============                =============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
     Basic and diluted                                                  146,920,823                   62,934,158
                                                                      =============                =============


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


                                                 5


<PAGE>
<TABLE>
<CAPTION>


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

                                                                                Three Months Ended March 31,
                                                                                ----------------------------
                                                                                  2006               2005
                                                                                  ----               ----
                                                                              (As Restated)

<S>                                                                             <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

     Net loss                                                                   $  (901)           $(1,013)
     Loss from discontinued operations                                               --                 26
     Adjustments to reconcile net loss to net cash used in operating
         Activities:
         Depreciation and amortization                                              107                111
         Expense related to stock options                                           119                 --
         Amortization of non-competition agreement                                  451                 --
         Net change in allowance accounts                                           353                 49
         Deferred financing fees                                                      8                  4
         Changes in assets and liabilities:
          (Increase) decrease in:
              Accounts receivable                                                (1,387)               981
              Inventory                                                            (943)              (500)
              Prepaid expenses and other                                            567                 44
          Increase (decrease) in:
              Accounts payable                                                      224               (255)
              Accrued expenses                                                     (178)                22
                                                                                -------            -------
         Net cash used in operating activities of continuing operations          (1,580)              (531)
         Net cash provided by operating activities of discontinued
              operations                                                             --                  4
                                                                                -------            -------
         Net cash used in operating activities                                   (1,580)              (527)
                                                                                -------            -------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of equipment and furniture, net                                      (157)              (186)
     Purchase of certain assets from ZMD                                            (38)                --
                                                                                -------            -------
     Net cash used in investing activities of continuing operations                (195)              (186)
     Net cash used in investing activities of discontinued operations                --                (23)
                                                                                -------            -------
     Net cash used in investing activities                                         (195)              (209)
                                                                                -------            -------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Payments on capital lease obligation                                           (13)               (13)
     Funds receiving from December 2005 equity financing, net                     1,874                 --
     Warrants issued for license rights                                             965                 --
     Exercise of stock options                                                       --                 58
                                                                                -------            -------
     Net cash provided by financing activities                                    2,826                 45
                                                                                -------            -------

Effect of exchange rate changes on cash                                              (3)                --
                                                                                -------            -------

NET CHANGE IN CASH AND CASH EQUIVALENTS                                           1,048               (691)
CASH AND CASH EQUIVALENTS, beginning of period                                    1,766              2,147
                                                                                -------            -------
CASH AND CASH EQUIVALENTS, end of period                                        $ 2,814            $ 1,456
                                                                                =======            =======
Cash paid for interest                                                          $    56            $    57
                                                                                =======            =======


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


                                                 6
<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
     ------------------------

     Adoption of SFAS 123(R)
     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 quarterly period ended March 31, 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 quarterly period ended March 31, 2006 of $119,000 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.

                                                                  Three Months
                                                                      Ended
                                                                  March 31, 2006
                                                                  --------------

(In thousands except per share amounts)
---------------------------------------
Research and development                                            $      39
Sales and marketing                                                        16
General and administrative                                                 64
                                                                    ---------
Share-based compensation effect on loss from continuing
     operations before provision for income taxes                   $     119
Provision for income taxes                                                  -
                                                                    ---------
Net share-based compensation effects on net loss                    $     119
                                                                    =========

Share-based compensation effects on basic and diluted loss
     per common share                                               $       -
                                                                    =========
Share-based compensation effects on cash flow from operations       $     119
                                                                    =========


                                       7
<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 March 31, 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 first quarter of 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 quarterly
period ended March 31, 2006.

Pro-Forma Stock Compensation Expense for the Quarterly Period Ended March 31,
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 exceeds 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 quarter ending
March 31, 2005, the Company's net loss and EPS would have been increased to the
pro forma amounts indicated below.

                                                                  Three Months
                                                                  ------------
                                                                 Ended March 31,
                                                                 ---------------
                                                                      2005
                                                                      ----
(In thousands except per share amounts)

Net loss as reported                                               $ (1,013)
     Add: Stock based compensation included in reported
     Net loss                                                             -
     Deduct: Fair value of stock based compensation                    (141)
                                                                   --------
     Proforma net loss                                             $ (1,154)
                                                                   ========

Net loss as reported - basic and diluted                           $   (.02)
Proforma net loss - basic and diluted                              $   (.02)




                                       8
<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 Quarterly Period Ended March 31, 2006

     The Company adopted a Non-Qualified Stock Option Plan in 1994, as amended,
that authorizes 18,600,000 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. None of the
options may be exercised during the first six months of the option term.

         The following table summarizes stock options outstanding and changes
during the quarterly period ended March 31, 2006:
<TABLE>
<CAPTION>

                                                                                   Outstanding Options
                                                                -------------------------------------------------------------
                                                                                                   Weighted
                                                                                                    Average
                                                                                                   Remaining
                                                                                    Weighted      Contractual       Aggregate
                                                                Number of            Average         Term           Intrinsic
                                                                  Shares         Exercise Price   (in years)          Value
                                                                ---------        --------------   -----------       ----------
<S>                                                             <C>                   <C>           <C>             <C>
Options outstanding at January 1, 2006.............             7,969,363             $0.62
  Granted..........................................               640,000              0.27
  Exercised........................................                     -                 -                                -
  Cancelled or forfeited...........................              (120,000)            (1.25)
                                                                ---------
Options outstanding at March 31, 2006..............             8,489,363             $0.56          3.63
                                                                =========             =====          ====           =========

Options exercisable at March 31, 2006..............             5,193,252             $0.65          3.63
                                                                =========             =====          ====           =========
</TABLE>

     There were no options exercised in the period ended March 31, 2006. Shares
available for grant under the Plan as of March 31, 2006 were 5,665,017.




                                       9
<PAGE>


                               SIMTEK CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Stock options outstanding and currently exercisable at March 31, 2006 are as
follows:

<TABLE>
<CAPTION>

                           Outstanding                                                      Exercisable
    --------------------------------------------------------------------------- ------------------------------------
                                        Weighted Average
                         ------------------------------------------------------
                                               Remaining          Weighted
                             Number        Contractual Life       Average            Number         Weighted Average
      Exercise Price       Outstanding         in Months       Exercise Price      Exercisable       Exercise Price
    ------------------- ------------------ ------------------ ----------------- ------------------ ------------------
     <S>                   <C>                   <C>            <C>                 <C>              <C>
     $0.14-$0.35           1,780,188             34             $     0.23          1,140,188        $     0.20

     $0.365-$0.60          3,267,716             53             $     0.46          1,403,251        $     0.45

     $0.62-$0.90           2,364,125             59             $     0.66          1,572,479        $     0.66

     $1.125-$1.53            927,334             37             $     1.26            927,334        $     1.26

     $1.90                   150,000             59             $     1.90            150,000        $     1.90
                             -------                                                  -------

                           8,489,363                                                5,193,252
                           =========                                                =========

</TABLE>

     Total estimated unrecognized compensation cost from unvested stock options
as of March 31, 2006 was approximately $1 million, which is expected to be
recognized over the next three years.

        The weighted average per share fair value of stock options granted
during the quarterly periods ending March 31, 2006 and 2005 was $0.1727 and
$0.3856, respectively. The fair value was estimated as of the grant date using
the Black-Scholes option pricing model with the following assumptions:

                                                    Three Months Ended March 31,
                                                    ----------------------------
                                                        2006            2005
                                                    -------------   ------------
     Volatility                                           85%            83%
     Expected option term                              4  years        4 years
     Risk-free interest rate                             4.59%          3.54%
     Expected dividend yield                               0%             0%


     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.





                                       10
<PAGE>


                               SIMTEK CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


     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 $451,000 to sales and marketing for the three months ended March
31, 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 March 31, 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).

2.   Change in Accounting Principle

     The Company originally recorded the receipt of the non-refundable prepaid
royalties received from Cypress on March 24, 2006 as a liability to be
recognized as revenue in the future based upon shipments of products by Cypress
to its customers (See Note 7 below). However, the Company subsequently
determined that the non-refundable prepaid royalties are more appropriately
accounted for as minimum royalty payments as described in Staff Accounting
Bulletin 101 "Revenue Recognition in Financial Statements." All of the revenue
recognition criteria contained in Statement of Financial Accounting Concepts No.
5 "Recognition and Measurement in Financial Statements of Business Enterprises"
have been met. Under the previous method of accounting, if Cypress does not
actually sell product, Simtek would never recognize the revenue. Since Simtek
fulfilled all of its obligations prior to receipt of the payment, the
non-refundable payments are more properly accounted for as minimum royalty
payments and recorded as revenue when received.

     The following table reflects the amounts as previously reported and as
restated:

                                                   As
                                               Reported       Restated
       (Amounts in thousands)
       Consolidated Balance Sheet:

       Prepaid royalties                     $     1,035     $      --
       Total liabilities                     $     8,430     $   7,395
       Accumulated deficit                   $   (48,127)    $ (47,092)
       Total shareholders' equity            $     2,008     $   3,043

       Consolidated Statement of Operations:

       Royalty revenue                       $        --     $   1,035
       Total revenue                         $     4,743     $   5,778
       Gross profit                          $     1,273     $   2,308
       Loss from operations                  $    (1,915)    $    (880)
       Net loss                              $    (1,936)    $    (901)





                                       11
<PAGE>


                               SIMTEK CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


3.   Liquidity

     During the three months ended March 31, 2006 and the twelve months ended
December 31, 2005, the Company incurred a net loss of approximately $1,936,000
and $5,785,000, respectively and has an accumulated deficit of $48,127,000 as of
March 31, 2006. The Company was also not in compliance with its debentures
throughout 2005 and the first three months of 2006, but was successful in
obtaining waivers through April 1, 2007 from the debenture holders. The Company
will issue the debenture holders a total of 50,000 warrants for receipt of the
waiver. The Company has working capital of approximately $4,846,000 as of March
31, 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 2006 it may
result in increased liquidity pressure on the Company, whereby it might be
required to enter into debt or equity arrangements that may not be as otherwise
favorable to the Company.

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 we have 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.

5.   Inventories

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

                                           March 31, 2006     December 31, 2005
     (In Thousands)

     Raw Materials                            $    67             $    33
     Work in progress                           1,476               1,096
     Finished Goods                             1,588               1,056
                                              -------             -------
                                                3,131               2,185
     Less reserves for excess inventory          (559)               (117)
                                              -------             -------
                                              $ 2,572             $ 2,068
                                              =======             =======

                                       12
<PAGE>



                               SIMTEK CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


6.   Convertible Debentures

     On July 1, 2002, the Company received funding of $3,000,000 in a financing
transaction with Renaissance Capital Growth and Income Fund III, Inc.,
Renaissance US Growth & Investment Trust PLC and 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. Through March 31,
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 May 10, 2006, the Company received a waiver for the two
covenants through April 1, 2007. The Company will issue the debenture holders a
total of 50,000 warrants for receipt of the waiver. 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.

      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 7.5% convertible debentures issued by the
Company in 2002. 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
will 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 $4,000 as additional interest expense for the three months ending
March 31, 2006.

7.   Non-Refundable Prepaid Royalties

     On March 24, 2006, the Company entered into a Development and License
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 is payable on
each of June 30, 2006 and 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 Development and License Agreement, the Company agreed
to issue to 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 March 31, 2006, the Company received $2,000,000 from Cypress in pre-paid
royalties. In addition, the Company has issued warrants to purchase 10 million
shares of common stock. The value of the warrants issued of $965,000 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 was recognized as revenue at the time the payment was
received.



                                       13
<PAGE>


                               SIMTEK CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


8.   Geographic Concentration

     Sales of the Company's semiconductor products by location for the three
months ended March 31, 2006 and 2005 were as follows:

                                                          Three Months Ended
                                                                 March 31,
                                                          ----------------------
                                                          2006              2005
                                                          ----              ----

     United States                                         19%               28%
     Europe                                                28%               17%
     Far East                                              44%               44%
     All Others                                             9%               11%
                                                          ----              ----
                                                          100%              100%
                                                          ====              ====

9.   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                               -
                                                     ---------
         Balance March 31, 2006                      $       -


10.   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.




                                       14
<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.

     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.

     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.





                                       15
<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 a 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.

     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. We
performed goodwill impairment testing as of March 31, 2006, and determined that
no impairment existed at that date. This assessment requires estimates of future
revenue, operating results and cash flows, as well as estimates of critical
valuation inputs such as discount rates, terminal values and similar data. We
will continue to perform 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.

Overview

     Total revenue for the three months ended March 31, 2006 was $5.8 million,
including $1.0 million of royalty revenue. Total unit shipments of our
semiconductor memory products increased for the three months ended March 31,
2006 as compared to the three months ended March 31, 2005. Our net product





                                       16
<PAGE>


                               SIMTEK CORPORATION


revenue was $4,743,000 for the three months ended March 31, 2006 up from the
$2,976,000 for the comparable period of 2005, an approximate 59% increase. 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.

     An approximate decrease of 3% in product gross margin percentage and
increased operating expenses had an impact on our profitability for the three
months ended March 31, 2006 compared to the three months ended March 31, 2005.
The increase in operating expenses includes non-cash charges of $448,000 for
amortization of the non-compete agreement with ZMD and $119,000 for expenses
related to employee stock options, plus first-time operating expenses of
$225,000 for our European subsidiary, Simtek GmbH.

     Consolidated revenue, from our product sales, for the first quarter of 2006
of $4,745,000 compared to $2,794,000 in the fourth quarter of 2005, an increase
of 70 percent, reflecting the effects of adding the nvSRAM business that was
acquired from ZMD, as well as increasing customer demand. During the first
quarter of 2006, we recorded royalty revenue of $1,035,000 received from
Cypress. Net loss for the first quarter of 2006 was $901,000, or $0.01 per
share, compared to a net loss of $1,851,000, or $0.02 per share, in the fourth
quarter of 2005. Net loss in the first quarter includes non-cash charges of
$448,000 for amortization of the non-compete agreement with ZMD, and $119,000
for expenses related to employee stock options, plus "first-time" operating
expenses of approximately $225,000 for Simtek GmbH. There were no comparable
charges in the fourth quarter of 2005 for these three first-quarter 2006
charges.

Results of Operations:

     Revenues

     The following table sets forth our net revenues for semiconductor devices
by product markets for the three months ended March 31, 2006 and 2005 (in
thousands):
<TABLE>
<CAPTION>

                                                               Three Months Ended
                                                                     March 31,
                                                     ---------------------------------------
                                                        2006           2005         Variance
                                                        ----           ----         --------
     <S>                                              <C>           <C>             <C>
     Commercial                                       $  3,951      $   2,407       $  1,544
     High-end industrial and military                      792            569       $    223
                                                      --------      ---------       --------

     Total Semiconductor Revenue                      $  4,743      $   2,976       $  1,767
                                                      ========      =========       ========
</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
$1,544,000 for the three months ended March 31, 2006 as compared to the three
months ended March 31, 2005. As stated previously, 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. Other factors affecting the increase were an increase
in unit shipments partially offset by a slight decrease in average selling
prices, which was primarily due to increased price competition at our largest,
high-volume customers and their subcontractors. Unit shipments increased due to
increased product demand and the addition of the product line purchased at the
end of 2005.

     High-end industrial and military product revenues accounted for an increase
of approximately $223,000 for the three months ended March 31, 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.




                                       17
<PAGE>


                               SIMTEK CORPORATION


     One distributor and one direct customer together accounted for
approximately 23% of our revenue for the quarter ended March 31, 2006. 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 $3,470,000 and $2,071,000 for the three months
ended March 31, 2006 and 2005, respectively. These costs reflect an approximate
3% decrease in gross margin percentages for our semiconductor products, for the
three months ended March 31, 2006 as compared to the same period in 2005. Actual
product gross margin percentages for the three months ended March 31, 2006 and
March 31, 2005 were 27% and 30% respectively. This decrease reflects the lower
average selling prices described above, partially offset by reduced costs of the
1 megabit device.

Research and Development

     We believe that continued investments in new product development are
required for us to remain competitive in the markets we serve. In 2005, our
research and development department continued its efforts on the development,
testing and qualification of our 1-megabit 3-volt nvSRAM with DBE. In September
2005, we qualified our 1-megabit products for use in the commercial and
industrial markets. Final qualification of the smaller 256-kilobit and
256-kilobit with real time clock, and the 1-megabit version with real time
clock, built on the 0.25-micron process at DBE is expected in the second quarter
of 2006.

     During the first quarter of 2006, we continued the 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 quarter of 2006 we achieved
our third major milestone under the development agreement, as scheduled. There
were no similar expenses in the first quarter of 2005.

         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:

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 IP, design-related
     IP, design-for-manufacturability know-how; and other IP 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.



                                       18
<PAGE>


                               SIMTEK CORPORATION


     Upon signing the agreement, Simtek received $2 million from Cypress, and
will receive additional payments of $1 million on June 30, 2006 and 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 are
expected to be 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 6 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 $1,545,000 for the three
months ended March 31, 2006 as compared to $1,145,000 for the same period in
2005.The $400,000 increase for the three month period was primarily related to
an increase of $315,000 related to the co-development with Cypress and $80,000
related to final development of the 256-kilobit nvSRAM products built at DBE.

Administration

     Total administration expenses were $699,000 for the three months ended
March 31, 2006 as compared to $293,000 for the same period in 2005.

     The $406,000 increase was due primarily to increases in payroll and payroll
related costs of $162,000, accounting and legal fees of $88,000, travel of
$41,000, contract services of $38,000, expense related to employee and director
stock options of $64,000 and miscellaneous expenses of $13,000. The increase in
payroll and payroll overhead costs were due to additional headcount and the
management restructure that began in May 2005. The increase in professional
services was primarily due to increased legal and accounting fees, which were
related to increased activity related to agreements with personnel and increased
securities work. The increase of $64,000 in employee and director stock option
expense was due to the requirement of expensing costs related to stock option
grants under FAS 123. See Note 1 to the Notes to the Condensed Consolidated
Financial Statements above.

Sales and Marketing

     Total sales and marketing expenses were $944,000 for the three months ended
March 31, 2006 as compared to $401,000 for the same period in 2005.

     The $543,000 increase was due primarily to amortization of the non-compete
agreement with ZMD of $448,000, an increase in payroll and payroll overhead
costs of $67,000, expense related to employee stock options of $16,000 and
miscellaneous other expenses. The increase in payroll and payroll overhead costs
were due to changes in sales and marketing personnel.

Net Loss from Continuing Operations

     We recorded a loss from continuing operations of $901,000 and $987,000 for
the three months ended March 31, 2006 and 2005, respectively. The decrease of
$86,000 for the three-month period reflects the revenue and expense items
discussed above.

Liquidity and Capital Resources

     As of March 31, 2006, we had a net working capital of $5,881,000 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 Development
and License 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 will 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 pre-paid royalties, $2 million of which was received at the



                                       19
<PAGE>


                               SIMTEK CORPORATION


time the contract was executed. The remaining $2 million will be paid in $1
million payments the first of which is scheduled for June 30, 2006, and the
final one scheduled for December 31, 2006. In addition, we agreed with Cypress
to work together to develop new products and processes. Please read Note 7 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 three months ended March
31, 2006 were $1,580,000 compared to $531,000 in the same period in 2005, an
increase of $1,049,000 as compared to the same period in 2005. The net change is
due to the decreased net loss, the increase in accounts receivable (compared to
a decrease in the 2005 period), a larger increase in inventory, which were
partially offset by the non-cash charges in 2006. The increase in inventory for
the three months ended March 31, 2006 was due primarily to higher volume of
silicon wafers and units in process, which will support future revenue.

     Cash flows used in investing activities decreased for the three months
ended March 31, 2006 by approximately $14,000 as compared to the same period in
2005.

     The increase of $2,781,000 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 of the warrants issued to Cypress for the Development and
License Agreement.

Short-term liquidity.

     Our cash balance at March 31, 2006 was $2,814,000.

     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 capital needs from sales revenues, the funds still due to us from Cypress
under the Joint Development and License Agreement and, to the extent we do not
have sufficient revenues, from our existing cash reserves.

Long-term liquidity.

     Based on current revenue, cost and profitability projections, current
working capital, plus the additional prepaid royalties due from Cypress, the
Company believes that it has adequate capital to sustain its operations for the
foreseeable future. However, the Company is also negotiating with a bank to
provide an accounts receivable based credit facility to provide additional
capital if needed.

























                                       20
<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.




























                                       21
<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 March 31, 2006, that have materially affected, or
are reasonably likely to materially affect, internal control over financial
reporting.












































                                       22
<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 - None

Item 3.  Defaults upon Senior Securities - None

Item 4.  Submission of Matters to a Vote of Security Holders - None

Item 5. Other Information. The following information was not required to be
disclosed on Form 8-K during the quarter ended March 31, 2006, but rather is
included in this Quarterly Report on Form 10-Q pursuant to Exchange Act Rule
14a-5(f). The Company expects to hold its annual meeting of shareholders on
June 29, 2006, subject to the discretion of our Board of Directors to change
such date based on changed circumstances. As a consequence of having advanced
the date of the annual meeting of shareholders by more than 30 days from the
date of the previous annual meeting, the deadline for the Company's receipt of
stockholder proposals for inclusion in the proxy statement is a reasonable time
before we begin to print and mail the proxy solicitation materials, as disclosed
in the proxy statement for the 2005 annual meeting. Also as disclosed in the
proxy statement for the 2005 annual meeting, a shareholder proposal or
nomination for director for consideration at the 2006 annual meeting but not
included in the proxy statement and proxy must be received by the Company no
later than 30 days prior to the first anniversary of the initial notice of the
2005 annual meeting, provided that such proposal need not be given more than 50
days prior to the first anniversary of the initial notice of the 2005 annual
meeting.

Item 6.  Exhibits

         10.1       License and Development Agreement, dated March 24, 2006, by
                    and between the Company and Cypress Semiconductor
                    Corporation, incorporated by reference to the Company's
                    Current Report on Form 8-K filed by the Company with the SEC
                    on March 30, 2006

         10.2       Amended and Restated Registration Rights Agreement, dated
                    March 24, 2006, by and between the Company and Cypress
                    Semiconductor Corporation, incorporated by reference to the
                    Company's Current Report on Form 8-K filed by the Company
                    with the SEC on March 30, 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















                                       23
<PAGE>


                               SIMTEK CORPORATION



                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                       SIMTEK CORPORATION
                                       (Registrant)



August 4, 2006                         By: /s/ Harold Blomquist
                                           -------------------------------------
                                           HAROLD BLOMQUIST
                                           Chief Executive Officer and President





August 4, 2006                         By: /s/ Brian Alleman
                                           -------------------------------------
                                           BRIAN ALLEMAN
                                           Chief Financial Officer

































                                       24