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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.
20549





FORM 10-K/A

(Amendment No. 1)

(Mark One)

| 
|-
| 
| 
| 
| 
|x
| 
| 

or



|o | TRANSITION REPORT PURSUANT TO SECTION 13 Or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------
| 
|  | For the transition period from ___________________ to ___________________               

Commission file number: 000-26541

GADZOOX NETWORKS, INC.

(Exact name of registrant as specified in its charter)


|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Delaware                                                       |  | 77-0308899                             
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification Number)

Stephen Dalton
President and Chief Executive Officer
5850 Hellyer Avenue
San Jose, CA 95138

(Address of principal executive
offices including Zip Code)


Registrants
telephone number, including area code:(408) 360-4950


Securities registered pursuant to Section 12(b) of the Act:
None


Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.005 par value


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.

Yesx  Noo

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of the registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or
any amendment to this Form 10-K.    o

The aggregate market value of voting stock held by non-affiliates of the Registrant was approximately
$6,146,909 as of June 26, 2002, based upon the closing price on The Nasdaq National Market reported
for such date. This calculation does not reflect a determination that certain persons are affiliates
of the Registrant for any other purpose. The number of shares outstanding of the Registrants common
stock on June 26, 2002 was 47,283,920 shares.




This report on Form 10-K/A (Amendment No. 1) is being filed to disclose those items previously
omitted from Part III of the Annual Report on Form 10-K filed by Gadzoox Networks, Inc. on July 1,
2002 in compliance with General Instruction G(3) to Form 10-K.



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TABLE OF CONTENTS



|           |                                                                                                         |  |  |  |  |  |  | 
|---------- | ------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART III  
|           | ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                            
|           | ITEM 11. EXECUTIVE COMPENSATION                                                                        
|           | ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|           | ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                
|SIGNATURES



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PART III




ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth certain information concerning our
executive officers and members of our board of directors as of July 26, 2002:

|                |  |     |    |          |  |                                                     |  |  |      | 
|--------------- |  | --- | -- | -------- |  | --------------------------------------------------- |  |  | ---- | 
|Name            |  | Age |    | Position |  | Since                                              
|                |  |     |    |          |  |                                                    
|Stephen Dalton  |  |     | 43 |          |  | President, Chief Executive Officer and Director     |  |  | 2002 | 
|Barbara Velline |  |     | 37 |          |  | Vice President, Finance and Chief Financial
Officer |  |  | 2002 | 
|Gary Kennedy    |  |     | 56 |          |  | Director                                            |  |  | 2002 | 
|Robert Kuhling  |  |     | 53 |          |  | Director                                            |  |  | 1996 | 
|Sylvia Summers  |  |     | 49 |          |  | Director                                            |  |  | 2001 | 
|Steven West     |  |     | 47 |          |  | Director                                            |  |  | 2001 | 

Stephen Daltonhas served as our President and Chief Executive Officer and
as a director since May 2002. Mr. Dalton joined us in January 2000 as Vice
President of Development. From 1998 to 2000, Mr. Dalton served as the Vice
President of Engineering, Americas for Force Computers, Inc. From 1997 to 1998
Mr. Dalton was Vice President of Product Development for Auspex Systems, Inc.,
or Auspex, a developer and manufacturer of network attached storage devices.
From 1995 to 1996, Mr. Dalton served as Vice President of Engineering of Auspex
and in 1996 he was promoted to President and Chief Technical Officer, in which
capacity he served until 1997. Mr. Dalton holds a BSET degree from California
Polytechnic State University and is currently enrolled in the MBA program at
Golden Gate University.

Barbara Vellinehas served as our Vice President of Finance and Chief
Financial Officer since March 2002. From 1998 to 1999 and from 2001 to 2002,
Ms. Velline was a senior finance consultant for David Powell, Inc., a Silicon
Valley based financial services firm. From 1999 to 2000, Ms. Velline was
Director of Project Management and Controller for Creditland, Inc., a
technology company providing real-time decisioning to financial institutions.
Ms. Velline served as Chief Financial Officer of Syncronys Softcorp, a software
company, from 1995 to 1997. Previously, Ms. Velline also held a number of
senior financial management positions with Pioneer Electronics USA, Inc., a
consumer electronics manufacturer and distributor. Ms. Velline began her career
as an auditor with Price Waterhouse. Ms. Velline holds a BS in Business
Administration/Accounting from the University of Southern California and is a
certified public accountant.

Gary Kennedyhas served as a director of the Company since May 2002. Mr.
Kennedy has been a managing partner of Silutions Technology Inc., an advisory
and investment firm with special focus on high technology, since 1998. He
currently serves on the board of MosChip Inc. and has served on the boards of
several high-tech companies over the past 17 years. In addition, Mr. Kennedy
served as President/CEO and Board member of Orbit Semiconductor, Inc. from 1985
until 1998. Mr. Kennedy holds a B.S. degree from the University of
San Francisco.

Robert Kuhlinghas served as a director of the Company since 1996. Mr.
Kuhling has been a general partner of venture capital funds managed by ONSET
Ventures since 1987. He is a director of Curon Medical, Inc., a company which
develops medical products, as well as several private companies. Mr. Kuhling
holds an M.B.A. from Harvard University and an A.B. in economics from Hamilton
College.

Sylvia Summershas served as a director of the Company since 2001. From
2001 to 2002, Ms. Summers served as CEO of Silvan Networks. From 2000 to 2001,
Ms. Summers served as a Group Vice President of Cisco Systems, Inc., a network
equipment company. From 1997 to 1999, Ms. Summers served as a Business Unit
Vice President and General Manager for Storage Technology, Inc. From 1993 to
1997, Ms. Summers served in various positions at Group Bull, an IT services
company, most recently serving as a Business Unit Vice President and General
Manager. Ms. Summers holds a B.S. from France, an electrical engineering degree
from the Ecole Polytechnique Feminine, an M.S.E.E. from the University of
California Berkeley and an M.B.A from the executive program of Thomson CSF.





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Steven Westhas served as a director of the Company since 2001. Mr. West
has been COO of nCube since 2001. From 1999 to 2000, Mr. West served as the
President and Chief Executive Officer of Entera, Inc., an internet content
delivery technologies company. From January 1999 to August 1999, Mr. West was
the President of the Services Business Unit at Electronic Data Systems
Corporation (EDS), a technology services company. From 1996 to 1999, Mr.
West served as President and Chief Executive Officer of Hitachi Data Systems, a
joint venture computer hardware services company owned by Hitachi, Ltd. and
EDS. From 1984 to 1996, Mr. West served in various positions at EDS, most
recently serving as President of EDSs Infotainment Business Unit. Mr. West is
a director of Cisco Systems, Inc., a network equipment company. Mr. West holds
a B.A.S. from Sienna Heights College.

As a result of our restructuring during fiscal 2002 and continuing in
fiscal 2003, many of our executive officers are no longer employed by us. Some
of these former executives include Michael Parides, President, and Chief
Executive Officer; David Eichler, Vice President of Finance and Chief Financial
Officer; Wayne Rickard, Senior Vice President and Chief Technology Officer; Ron
vonTrapp, Vice President of Sales; Clark Foy, Vice President of Sales and
Marketing; Erik Ottem, Vice President of Sales and Marketing; William Hubbard,
Vice President of Operations; Eddie Streeter, Vice President of Operations; Ed
Turner, Vice President of Strategic Alliances and Solutions; and Kristin
Strout, Vice President of Human Resources. Wayne Rickard, our former Senior
Vice President and Chief Technology Officer continues to serve us in an
advisory capacity.

There are no family relationships between any of our directors or
executive officers.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended requires
that all of our executive officers and directors and persons who own more than
ten percent (10%) of a registered class of our equity securities file reports
of ownership and changes in ownership with the SEC and the National Association
of Securities Dealers, Inc. Such officers, directors, and 10% stockholders are
also required by SEC rules to furnish us with copies of all Section 16(a)
reports that they file. A report on Form 3 and Form 5 were not filed by Eddie
Streeter, Jr. with respect to his grants of options on August 16, 2001 and
December 17, 2001. Based solely on our review of the copies of such forms
received by us, or written representations from certain reporting persons, we
believe that, other than the exceptions described in this paragraph, during
fiscal 2002, all Executive Officers and Directors of the Company complied with
all applicable filing requirements during the fiscal year ended March 31, 2002.




ITEM 11. EXECUTIVE COMPENSATION

Summary Compensation Table

The following table presents the compensation earned, awarded or paid for
services rendered to us in all capacities for the fiscal years ended March 31,
2002, 2001 and 2000, respectively, by our current executive officers; our
former chief executive officer and the four other most highly compensated
executive officers who were executive officers on March 31, 2002; and two other
highly compensated executive officers who were executive officers during the
fiscal year ended March 31, 2002 but were no longer executive officers on March
31, 2002. We refer to such individuals elsewhere in this report as named
executive officers.

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|                            |                               |      |        |           |  |          |                     |            |            |                 |         |        |  |  |              |         |  |   |         |   | 
|--------------------------- | ----------------------------- | ---- | ------ | --------- |  | -------- | ------------------- | ---------- | ---------- | --------------- | ------- | ------ |  |  | ------------ | ------- |  | - | ------- | - | 
|                            |                               |      |        |           |  |          |                     |            |            |                 |         |        |  |  | Long-Term    |         |  |   |        
|                            |                               |      |        |           |  |          |                     |            |            |                 |         |        |  |  | Compensation |         |  |   |        
|                            |                               |      |        |           |  |          |                     |            |            |                 |         |        |  |  | Awards       |         |  |   |        
|                            |                               |      |        |           |  |          |                     |            |            |                 |         |        |  |  |              |         |  |   |        
|                            |                               |      |        |           |  |          | Annual Compensation |            | Securities |                 |         |        | 
|                            |                               |      | Fiscal |           |  |          | Underlying          |            | All Other 
|Name and Principal Position |                               | Year |        | Salary($) |  | Bonus($) |                     | Options(#) |            | Compensation($)
|                            |                               |      |        |           |  |          |                     |            |            |                
|Current Executive Officers: |                               |      |        |           |  |          |                     |            |            |                 |         |        |  |  |              |         |  |   |         |  
|Stephen Dalton(1)           |                               |      | 2002   |           |  | $        | 221,125             |            |            | $               | 35,000  |        |  |  | 650,000      |         |  | $ |        |  
|                            | President and Chief Executive |      |        | 2001      |  |          |                     | 208,250    |            |                 |         | 50,000 |  |  |              | 270,000 |  |   |         |  | 
|                            | Officer                       |      |        | 2000      |  |          |                     | 47,179     |            |                 |         | 25,000 |  |  |              | 125,000 |  |   |         |  | 
|Barbara Velline             |                               |      | 2002   |           |  |          | 19,062              |            |            |                 | 45,000  |        |  |  | 150,000      |         |  |   |        |  
|                            | Vice President of Finance and |      |        | 2001      |  |          |                     |           |            |                 |         |       |  |  |              |        |  |   |         |  | 
|                            | Chief Financial Officer       |      |        | 2000      |  |          |                     |           |            |                 |         |       |  |  |              |        |  |   |         |  | 
|Former Executive Officers:  |                               |      |        |           |  |          |                     |            |            |                 |         |        |  |  |              |         |  |   |         |  
|Michael Parides(2)          |                               |      | 2002   |           |  |          | 314,807             |            |            |                 | 100,000 |        |  |  | 1,550,000    |         |  |   |        |  
|                            | President and                 |      |        | 2001      |  |          |                     | 235,423    |            |                 |         |       |  |  |              | 630,000 |  |   |         |  | 
|                            | Chief Executive Officer       |      |        | 2000      |  |          |                     | 48,471     |            |                 |         |       |  |  |              | 130,000 |  |   |         |  | 
|David Eichler(3)            |                               |      | 2002   |           |  |          | 194,855             |            |            |                 | 25,000  |        |  |  | 265,406      |         |  |   |        |  
|                            | Vice President of Finance and |      |        | 2001      |  |          |                     |           |            |                 |         |       |  |  |              |        |  |   |         |  | 
|                            | Chief Financial Officer       |      |        | 2000      |  |          |                     |           |            |                 |         |       |  |  |              |        |  |   |         |  | 
|Eric Ottem(4)               |                               |      | 2002   |           |  |          | 170,006             |            |            |                 | 40,000  |        |  |  | 315,200      |         |  |   |        |  
|                            | Vice President of Sales and   |      |        | 2001      |  |          |                     | 153,667    |            |                 |         | 10,000 |  |  |              | 111,000 |  |   |         |  | 
|                            | Marketing                     |      |        | 2000      |  |          |                     | 117,500    |            |                 |         |       |  |  |              |        |  |   |         |  | 
|Kristin Strout(5)           |                               |      | 2002   |           |  |          | 160,000             |            |            |                 | 50,000  |        |  |  | 275,000      |         |  |   |        |  
|                            | Vice President of Human       |      |        | 2001      |  |          |                     | 6,308      |            |                 |         | 5,000  |  |  |              | 45,000  |  |   |         |  | 
|                            | Resources                     |      |        | 2000      |  |          |                     |           |            |                 |         |       |  |  |              |        |  |   |         |   | 
|Wayne Rickard(6)            |                               |      | 2002   |           |  |          | 191,127             |            |            |                 | 37,000  |        |  |  | 250,000      |         |  |   | 36,083  |  
|                            | Senior Vice President of      |      |        | 2001      |  |          |                     | 204,417    |            |                 |         | 4,507  |  |  |              | 215,000 |  |   |         |  | 
|                            | Research and Development      |      |        | 2000      |  |          |                     | 163,041    |            |                 |         |       |  |  |              | 35,000  |  |   |         |  | 
|Clark Foy(7)                |                               |      | 2002   |           |  |          | 117,115             |            |            |                 | 75,000  |        |  |  | 250,000      |         |  |   | 343,031 |  
|                            | Vice President of Marketing   |      |        | 2001      |  |          |                     | 156,846    |            |                 |         | 60,000 |  |  |              | 285,000 |  |   |         |  | 
|                            |                               |      | 2000   |           |  | $        |                    |            |            | $               |        |        |  |  |             |         |  | $ |        |  



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|(1) |  | Mr. Dalton was appointed President and Chief Executive Officer in May
2002. From January 2000 until May 2002, Mr. Dalton served as the
Companys Vice President of Engineering.                                                                                                                                             
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Mr. Parides was appointed President and Chief Executive Officer in August
2000 and resigned in May of 2002. From June 2000 until August 2000, Mr.
Parides served as the Companys Chief Operating Officer and from January
2000 until June 2000, he served as Vice President of Advanced SAN
Solutions and Customer Service.
|   
|   
|   
|   
|(3) |  | Mr. Eichler resigned as our Vice President of Finance and Chief Financial
Officer in March 2002.                                                                                                                                                                                                                            
|   
|   
|   
|   
|(4) |  | Mr. Ottem resigned as our Vice President of Sales and Marketing in June
2002. Bonus compensation includes $15,000 of commission payments.                                                                                                                                                                                   
|   
|   
|   
|   
|(5) |  | Ms. Strout resigned as our Vice President of Human Resources in May 2002.                                                                                                                                                                                                                                                   
|   
|   
|   
|   
|(6) |  | Mr. Rickard resigned as our Senior Vice President of Research and
Development in January 2002. Other compensation consists of $36,083 in
severance payments.                                                                                                                                                                
|   
|   
|   
|   
|(7) |  | Mr. Foy resigned as our Vice President of Marketing in January 2002.
Bonus compensation includes $25,000 of commission payments. Other
compensation consists of $35,652 in severance payments and forgiveness of
a loan in the amount of $307,378.                                                                          

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Option Grants in Last Fiscal Year

The following table shows information regarding stock options granted to
the named executive officers during fiscal year 2002. Potential realizable
values with respect to such options are computed by:



| |  |  | Multiplying the number of shares of common stock underlying
each option by the exercise price,                                                                             
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Assuming that the total stock value derived from that
calculation compounds at the annual 5% or 10% rate shown in the table
for the entire ten-year term of the option, and
|
| |  |  | Subtracting from that result the total option exercise price.                                                                                                              

The 5% and 10% annual return rate is based on the rules of the SEC and do
not reflect projections or estimates of future stock price growth. Actual
gains, if any, on stock option exercises will be dependent on the future
performance of our common stock.

The percentage of total options is based on an aggregate of 11,217,440
options granted by us to our employees, directors and consultants, including
the named executive officers, during fiscal 2002. The 11,217,440 shares of
common stock subject to options granted in fiscal 2002 includes 3,452,000
shares granted under the 1993 Stock Option Plan, as amended; 7,625,440 shares
granted under the 2000 Nonstatutory Stock Option Plan, as amended; and 140,000
shares granted under the 1999 Director Plan.

The per share exercise price of stock option grants is equal to the
closing sales price of our common stock as reported by The Nasdaq National
Market on the date of grant with the exception of the shares granted in
December 2001, with an exercise price of $0.25. These shares were granted at a
price below the market closing price on the date of grant in an effort to
provide added incentive and retention of valuable employees. The difference
between the fair market value of the common stock and the option exercise price
at the date of grant was recorded as deferred compensation in stockholders
equity on the Condensed Balance Sheet at December 31, 2001 and will be
amortized through June, 2002.

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|                            |  |            |         |               |  |           |      |            |  |    |       |                        |  |                            |          |  |  |                            |           |  |  |   |           | 
|--------------------------- |  | ---------- | ------- | ------------- |  | --------- | ---- | ---------- |  | -- | ----- | ---------------------- |  | -------------------------- | -------- |  |  | -------------------------- | --------- |  |  | - | --------- | 
|                            |  |            |         |               |  |           |      |            |  |    |       |                        |  |                            |          |  |  | Potential Realizable Value
|                            |  | Number of  |         | Percent of    |  |           |      |            |  |    |       |                        |  | at Assumed Annual Rates of
|                            |  | Securities |         | Total Options |  | Exercise  |      |            |  |    |       | Stock Appreciation for
|                            |  | Underlying |         | Granted to    |  | Price Per |      |            |  |    |       | Option Term           
|                            |  | Options    |         | Employees in  |  | Share     |      | Expiration |  |   
|Name                        |  | Granted(1) |         | Fiscal 2002   |  | ($/Share) |      | Date(2)    |  | 5% |       | 10%                   
|                            |  |            |         |               |  |           |      |            |  |    |       |                       
|Current Executive
Officers: |  |            |         |               |  |           |      |            |  |    |       |                        |  |                            |          |  |  |                            |           |  |  |   |           | 
|Stephen Dalton(3)           |  |            | 26,050  |               |  |           | 0.23 |            |  | $  | 4.125 |                        |  |                            | 5/01/11  |  |  | $                          | 175,035   |  |  | $ | 278,714   | 
|                            |  |            | 223,950 |               |  |           | 2.00 |            |  |    | 4.125 |                        |  |                            | 5/01/11  |  |  |                            | 1,504,763 |  |  |   | 2,396,083 | 
|                            |  |            | 28,000  |               |  |           | 0.25 |            |  |    | 0.63  |                        |  |                            | 12/17/11 |  |  |                            | 28,734    |  |  |   | 45,754    | 
|                            |  |            | 172,000 |               |  |           | 1.53 |            |  |    | 0.63  |                        |  |                            | 12/17/11 |  |  |                            | 176,507   |  |  |   | 281,058   | 
|                            |  |            | 200,000 |               |  |           | 1.78 |            |  |    | 0.25  |                        |  |                            | 12/17/11 |  |  |                            | 81,445    |  |  |   | 129,687   | 
|Barbara Velline(4)          |  |            | 150,000 |               |  |           | 1.34 |            |  |    | 0.50  |                        |  |                            | 3/11/12  |  |  |                            | 122,167   |  |  |   | 194,531   | 
|Former Executive
Officers:  |  |            |         |               |  |           |      |            |  |    |       |                        |  |                            |          |  |  |                            |           |  |  |   |           | 
|Michael Parides(5)          |  |            | 56,826  |               |  |           | 0.51 |            |  |    | 1.76  |                        |  |                            | 5/01/11  |  |  |                            | 162,912   |  |  |   | 259,410   | 
|                            |  |            | 693,174 |               |  |           | 6.18 |            |  |    | 1.76  |                        |  |                            | 5/01/11  |  |  |                            | 1,987,229 |  |  |   | 3,164,330 | 
|                            |  |            | 400,000 |               |  |           | 3.57 |            |  |    | 0.25  |                        |  |                            | 12/17/11 |  |  |                            | 162,889   |  |  |   | 259,374   | 
|                            |  |            | 344,000 |               |  |           | 3.07 |            |  |    | 0.63  |                        |  |                            | 12/17/11 |  |  |                            | 353,014   |  |  |   | 562,116   | 
|                            |  |            | 56,000  |               |  |           | 0.50 |            |  |    | 0.63  |                        |  |                            | 12/17/11 |  |  |                            | 57,467    |  |  |   | 91,507    | 
|David Eichler(6)            |  |            | 61,408  |               |  |           | 0.55 |            |  |    | 3.10  |                        |  |                            | 5/31/11  |  |  |                            | 310,084   |  |  |   | 493,757   | 
|                            |  |            | 63,592  |               |  |           | 0.57 |            |  |    | 3.10  |                        |  |                            | 5/31/11  |  |  |                            | 321,112   |  |  |   | 511,318   | 
|                            |  |            | 41,406  |               |  |           | 0.37 |            |  |    | 0.99  |                        |  |                            | 10/10/11 |  |  |                            | 66,772    |  |  |   | 106,323   | 
|                            |  |            | 10,500  |               |  |           | 0.09 |            |  |    | 0.63  |                        |  |                            | 12/17/11 |  |  |                            | 10,775    |  |  |   | 17,158    | 
|                            |  |            | 32,250  |               |  |           | 0.29 |            |  |    | 0.63  |                        |  |                            | 12/17/11 |  |  |                            | 33,095    |  |  |   | 52,698    | 
|                            |  |            | 56,250  |               |  |           | 0.50 |            |  |    | 0.25  |                        |  |                            | 12/17/11 |  |  |                            | 22,906    |  |  |   | 36,475    | 
|Erik Ottem                  |  |            | 65,000  |               |  |           | 0.58 |            |  |    | 1.76  |                        |  |                            | 5/01/11  |  |  |                            | 186,346   |  |  |   | 296,724   | 
|                            |  |            | 17,500  |               |  |           | 0.16 |            |  |    | 0.63  |                        |  |                            | 12/17/11 |  |  |                            | 17,959    |  |  |   | 28,596    | 
|                            |  |            | 125,200 |               |  |           | 1.12 |            |  |    | 0.25  |                        |  |                            | 12/17/11 |  |  |                            | 50,984    |  |  |   | 81,184    | 
|                            |  |            | 107,500 |               |  |           | 0.96 |            |  |    | 0.63  |                        |  |                            | 12/17/11 |  |  |                            | 110,317   |  |  |   | 175,661   | 
|Kristin Strout              |  |            | 22,840  |               |  |           | 0.20 |            |  |    | 1.76  |                        |  |                            | 5/01/11  |  |  |                            | 65,479    |  |  |   | 104,264   | 
|                            |  |            | 102,160 |               |  |           | 0.91 |            |  |    | 1.76  |                        |  |                            | 5/01/11  |  |  |                            | 292,878   |  |  |   | 466,359   | 
|                            |  |            | 10,500  |               |  |           | 0.09 |            |  |    | 0.63  |                        |  |                            | 12/17/11 |  |  |                            | 10,775    |  |  |   | 17,158    | 
|                            |  |            | 64,500  |               |  |           | 0.57 |            |  |    | 0.63  |                        |  |                            | 12/17/11 |  |  |                            | 66,190    |  |  |   | 105,397   | 
|                            |  |            | 75,000  |               |  |           | 0.67 |            |  |    | 0.25  |                        |  |                            | 12/17/11 |  |  |                            | 30,542    |  |  |   | 48,633    | 
|Wayne Rickard               |  |            | 26,044  |               |  |           | 0.23 |            |  |    | 1.76  |                        |  |                            | 5/01/11  |  |  |                            | 74,664    |  |  |   | 118,891   | 
|                            |  |            | 223,956 |               |  |           | 2.00 |            |  |    | 1.76  |                        |  |                            | 5/01/11  |  |  |                            | 642,049   |  |  |   | 1,022,356 | 
|Clark Foy                   |  |            | 26,043  |               |  |           | 0.23 |            |  |    | 1.76  |                        |  |                            | 5/01/11  |  |  |                            | 74,661    |  |  |   | 118,886   | 
|                            |  |            | 223,957 |               |  |           | 2.00 |            |  | $  | 1.76  |                        |  |                            | 5/01/11  |  |  | $                          | 642,052   |  |  | $ | 1,022,361 | 



---

|(1) |  | The options for each of the named executive officers granted prior to
December 17, 2001 vest at the rate of 2.08% of the shares subject to the
option per month. The options granted on December 17, 2001 and later vest
at the rate of 8.33% of the shares subject to the option per month. Under
the terms of the 1993 Stock Option Plan, our board of directors retains
the discretion to modify the terms, including the price, of outstanding
options.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Options may terminate before their expiration dates if the optionees
status as an employee is terminated or upon the optionees death or
disability.                                                                                                                                                                                                                                                                                                      
|   
|   
|   
|   
|(3) |  | Upon a change of control, a portion of Mr. Daltons options shall be
subject to accelerated vesting. See Item 11, Change of Control, Severance
and Consulting Arrangements.                                                                                                                                                                                                                                                                              
|   
|   
|   
|   
|(4) |  | Upon a change of control, a portion of Ms. Vellines options shall be
subject to accelerated vesting. See Item 11, Change of Control, Severance
and Consulting Arrangements.                                                                                                                                                                                                                                                                             
|   
|   
|   
|   
|(5) |  | Upon Mr. Paridess resignation as CEO, a portion of his options were
subject to accelerated vesting. See Item 11, Change of Control, Severance
and Consulting Arrangements.                                                                                                                                                                                                                                                                              

-5-



---



##### Table of Contents



|(6) |  | Upon a change of control, a portion of Mr. Eichlers options shall be
subject to accelerated vesting. See Item 11, Change of Control, Severance
and Consulting Arrangements.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Aggregate Option Exercises During Last Fiscal Year and Fiscal Year-End Option
Values

The following table presents information regarding the named executive
officers concerning option exercises for fiscal 2002 and exercisable and
unexercisable options held by such individuals as of March 31, 2002. The
Value Realized on option exercises is equal to the difference between the
closing sales price of our common stock as reported by The Nasdaq National
Market on the date of exercise less the option exercise price. The Value of
Unexercised In-the-Money Options at March 31, 2002 is based on a price of
$0.45 per share, the closing sales price of our common stock on March 28, 2002
(the last trading day in fiscal 2002) as reported by The Nasdaq National
Market, minus the weighted average per share exercise price of options held by
such named executive officer, multiplied by the aggregate number of shares
underlying the unexercised options held by such officer.

|                            |                    |             |             |             |       |                |   |                  |                           |                |                        |                  |                              |  |  |           |  |  |   |        |  |  |   |        | 
|--------------------------- | ------------------ | ----------- | ----------- | ----------- | ----- | -------------- | - | ---------------- | ------------------------- | -------------- | ---------------------- | ---------------- | ---------------------------- |  |  | --------- |  |  | - | ------ |  |  | - | ------ | 
|                            |                    |             |             |             |       |                |   |                  |                           |                | Number of Securities   |                  | Value of Unexercised In-the-
|                            |                    |             |             |             |       |                |   |                  |                           |                | Underlying Unexercised |                  | Money Options at            
|                            |                    |             | Shares      |             |       |                |   |                  | Options at March 31, 2002 |                | March 31, 2002        
|                            |                    |             | Acquired On |             | Value |                |   |                  |                          
|Name                        |                    | Exercise(#) |             | Realized($) |       | Exercisable(#) |   | Unexercisable(#) |                           | Exercisable(#) |                        | Unexercisable(#)
|                            |                    |             |             |             |       |                |   |                  |                           |                |                        |                 
|Current Executive Officers: |                    |             |             |             |       |                |   |                  |                           |                |                        |                  |                              |  |  |           |  |  |   |        |  |  |   |       
|                            | Stephen Dalton(1)  |             |             | 1,045,000   |       |                | $ |                 |                           |                |                        | 325,938          |                              |  |  | 719,062   |  |  | $ | 20,000 |  |  | $ | 20,000 | 
|                            | Barbara Velline(2) |             |             | 150,000     |       |                |   |                 |                           |                |                        |                 |                              |  |  | 150,000   |  |  |   |       |  |  |   |       | 
|Former Executive Officers:  |                    |             |             |             |       |                |   |                  |                           |                |                        |                  |                              |  |  |           |  |  |   |        |  |  |   |       
|                            | Michael Parides(3) |             |             | 2,310,000   |       |                |   |                 |                           |                |                        | 660,624          |                              |  |  | 1,649,376 |  |  |   | 40,000 |  |  |   | 40,000 | 
|                            | David Eichler(4)   |             |             | 475,000     |       |                |   |                 |                           |                |                        | 45,313           |                              |  |  | 429,687   |  |  |   | 7,500  |  |  |   | 7,500  | 
|                            | Erik Ottem         |             |             | 450,000     |       |                |   |                 |                           |                |                        | 133,223          |                              |  |  | 311,697   |  |  |   | 12,500 |  |  |   | 12,500 | 
|                            | Kristin Strout     |             |             | 320,000     |       |                |   |                 |                           |                |                        | 75,730           |                              |  |  | 244,270   |  |  |   | 7,500  |  |  |   | 7,500  | 
|                            | Wayne Rickard      |             |             | 891,000     |       |                |   |                 |                           |                |                        | 371,520          |                              |  |  | 369,480   |  |  |   | 13,680 |  |  |   |       | 
|                            | Clark Foy          |             |             | 138,125     |       |                | $ |                 |                           |                |                        | 138,125          |                              |  |  |          |  |  | $ |       |  |  | $ |       | 



---

|(1) |  | Upon a change of control, a portion of Mr. Daltons options shall be
subject to accelerated vesting. See Item 11, Change of Control, Severance
and Consulting Arrangements. 
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Upon a change of control, a portion of Ms. Vellines options shall be
subject to accelerated vesting. See Item 11, Change of Control, Severance
and Consulting Arrangements.
|   
|   
|   
|   
|(3) |  | Upon Mr. Paridess resignation as CEO, a portion of his options were
subject to accelerated vesting. See Item 11, Change of Control, Severance
and Consulting Arrangements. 
|   
|   
|   
|   
|(4) |  | Upon a change of control, a portion of Mr. Eichlers options shall be
subject to accelerated vesting. See Item 11, Change of Control, Severance
and Consulting Arrangements.

-6-



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##### Table of Contents



Compensation of Directors

Our non-employee directors are reimbursed for expenses incurred in
connection with attending meetings of the board of directors and board
committee meetings, but they are not compensated for their services as members
of the board of directors or board committees. We grant non-employee directors
options to purchase our common stock pursuant the terms of the 1999 Director
Stock Option Plan. Directors also are eligible to receive option grants to
purchase our common stock pursuant to the terms of the 1993 Stock Option Plan.
For more information, please see Item 12, Security Ownership of Certain
Beneficial Owners and Management.

The 1999 Director Stock Option Plan provides for the automatic grant of
70,000 shares of common stock to each non-employee director on the date on
which such person first becomes a non-employee director. Additionally, each
non-employee director shall automatically be granted an option to purchase
30,000 shares of common stock each year on May 1 if, on that date, he or she
has served on the board of directors for at least the preceding six months.
Each option shall have a term of three years, and each option is immediately
exercisable.

Options granted under the Director Plan must be exercised within three
months after the end of an optionees tenure as a member of the board of
directors, or within 12 months after his or her death or disability, but in any
case not later than the expiration of the options term. All options granted
under the 1999 Director Stock Option Plan become fully vested and immediately
exercisable upon the event of a change of control of the Company.

Employment, Change of Control and Severance Agreements and Consulting Arrangements

Steve Dalton.We have entered into an employment agreement with Mr. Dalton
pursuant to which, upon the termination of his employment with us without
cause, Mr. Dalton would receive (i) continuation of his salary in effect
immediately prior to his termination for a 12 month period, (ii) payment by us
of COBRA premiums for up to 12 months, and (iii) accelerated vesting of his
options, with respect to the number of shares that would have become vested had
his employment continued for an additional 12 months. Mr. Daltons employment
agreement also provides for an annual salary of $275,000, a quarterly bonus
equal to 25% of Mr. Daltons annual salary (eligibility of receipt of bonus to
be based upon Mr. Daltons performance and our attainment of objectives to be
mutually agreed upon by Mr. Dalton and the board of directors), and the grant
of options to purchase up to 800,000 shares of Common Stock. Additionally, we
entered into an amended and restated change of control agreement with Mr.
Dalton, pursuant to which, upon the closing of a transaction resulting in a
change of control that occurs while Mr. Dalton continues to be employed by us,
the vesting with respect to the greater of (i) fifty percent (50%) of the
then-unvested shares or (ii) the number of shares that would have otherwise
become vested over the subsequent 12 months following the closing of such
change of control transaction shall automatically accelerate such that all
unvested shares shall be vested and exercisable. The change of control
agreement also provides for the immediate vesting of any and all unvested stock
options if Mr. Daltons employment with us terminates at any time as a result
of involuntary termination (as defined in the agreement) other than for cause
within 12 months after a change of control transaction.

Barbara Velline. We have entered into an employment agreement with Ms.
Velline pursuant to which, upon the termination of her employment with us
without cause, Ms. Velline would receive (i) continuation of her salary in
effect immediately prior to her termination for a 12 month period, (ii) payment
by us of COBRA premiums for up to 12 months, and (iii) accelerated vesting of
her options, with respect to the number of shares that would have become vested
had her employment continued for an additional 12 months. Ms. Vellines
employment agreement also provides for an annual salary of $225,000, a
quarterly bonus equal to 25% of Ms. Vellines annual salary (eligibility of
receipt of bonus to be based upon Ms. Vellines performance and our attainment
of objectives to be mutually agreed upon by Ms. Velline and the board of
directors), and the grant of options to purchase up to 500,000 shares of Common
Stock. Additionally, we entered into a change of control agreement with Ms.
Velline, pursuant to which, upon the closing of a transaction resulting in a
change of control that occurs while Ms. Velline continues to be employed by us,
the vesting with respect to the greater of (i) fifty percent (50%) of the
then-unvested shares or (ii) the number of shares that would have otherwise
become vested over the subsequent 12 months following the closing of such
change of control transaction shall automatically accelerate such that all
unvested shares shall be vested and exercisable. The change of control
agreement also provides for the immediate vesting of any and all unvested
stock options if Ms. Vellines employment with us terminates at any time as a
result of involuntary termination (as defined in the agreement) other than for
cause within 12 months after a change of control transaction.

-7-



---



##### Table of Contents



Michael Parides.In May 2002, Michael Parides resigned his position as the
President and Chief Executive Officer of the Company and as a member of the
board of directors. We entered into a severance agreement and mutual release
with Mr. Parides pursuant to which, upon the termination of his employment with
the Company, Mr. Parides became entitled to receive (i) continuation of his
salary in effect immediately prior to his termination for a one-year period,
(ii) the acceleration and immediate vesting of 1,644,167 stock options (with
the balance of any stock options not so accelerated being returned to the 1993
Stock Option Plan and the 2000 Nonstatutory Stock Option Plan), (iii) payment
by us of COBRA premiums for up to 12 months, (iv) and ownership of his laptop
computer system and cellular phone.

David Eichler.In March, 2002, David Eichler resigned his position as the
Vice President of Finance and Chief Financial Officer of the Company. The
Company entered into a severance agreement and mutual release with Mr. Eichler
pursuant to which, upon the termination of his employment with us, Mr. Eichler
became entitled to receive (i) continuation of his salary in effect immediately
prior to his termination for a three month period, and (ii) payment by us of
COBRA premiums for up to three months. Additionally, we entered into an amended
and restated change of control agreement with Mr. Eichler pursuant to which, if
a transaction resulting in a change of control occurs within 6 months of
termination of Mr. Eichlers employment, Mr. Eichler will receive accelerated
vesting of the greater of (i) 50% of his unvested shares at the time of
termination, or (ii) the number of shares that would otherwise have become
vested over the subsequent 12 months.

Erik Ottem.In June, 2002, we entered into a severance agreement and
mutual release with Mr. Ottem pursuant to which, upon the termination of his
employment with us, Mr. Ottem became entitled to receive (i) continuation of
his salary in effect immediately prior to his termination for a three month
period, and (ii) payment by us of COBRA premiums for up to three months.

Kristin Ann Strout.In May, 2002, we entered into a severance agreement
and mutual release with Ms. Strout pursuant to which, upon the termination of
her employment with us, Ms. Strout became entitled to receive (i) continuation
of her salary in effect immediately prior to her termination for a three month
period, (ii) payment by us of COBRA premiums for up to three months, and (iii)
ownership of her laptop computer system. Additionally, we entered into a
consulting agreement with Ms. Strout for a one-week period of time after the
termination of her employment.

Wayne Rickard.In January, 2002, we entered into a severance agreement and
mutual release with Mr. Rickard pursuant to which, upon the termination of his
employment with us, Mr. Rickard became entitled to receive (i) continuation of
his salary in effect immediately prior to his termination for a four month
period, (ii) and payment by us of COBRA premiums for up to four months.
Additionally, we entered into a consulting agreement with Mr. Rickard for a
six-month period of time after the termination of his employment in which we
agreed to pay Mr. Rickard a flat retainer fee of $30,000, payable in six
monthly installments of $5,000 each for business consulting services,
continuation as our representative to the industry association, and for general
administrative and management services. We further agreed in the consulting
agreement to pay Mr. Rickard a daily fee of $3,000 for any services in addition
to those listed above.

Clark Foy.In January, 2002, we entered into a severance agreement and
mutual release with Mr. Foy pursuant to which, upon the termination of his
employment with the Company, Mr. Foy became entitled to receive (i)
continuation of his salary in effect immediately prior to his termination for a
nine week period, (ii) and forgiveness of all principal and interest under the
Promissory Note, dated June 26, 2000, executed and delivered by Mr. Foy and Mr.
Foys wife evidencing principal indebtedness owed to the Company of $285,000.

Compensation Committee Interlocks and Insider Participation

None of the members of the compensation committee is currently or has
been, at any time since our formation, an officer or employee of the Company.
During fiscal 2002, no member of the compensation committee or executive
officer of the Company served as a member of the board of directors or
compensation committee of any entity that had one or more executive officers
serving as a member of the Companys board of directors or compensation
committee.

-8-



---



##### Table of Contents






ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

The following table sets forth certain information regarding the
beneficial ownership of our common stock as of July 2, 2002 by:



| |  |  | each stockholder known by us to beneficially own more than 5% of our common stock;   
| | - |  | -------------------------------------------------------------------------------------
|
| |  |  | each of our directors, including director nominees;                                  
|
| |  |  | each of our executive officers named in the summary compensation table on page 2; and
|
| |  |  | all of our directors and executive officers as a group, including director nominees. 

Beneficial ownership is determined based on the rules of the SEC. Percent
of beneficial ownership is based upon 47,306,253 shares of our common stock
outstanding as of July 2, 2002. In addition, shares of common stock subject to
options that are exercisable as of July 2, 2002 or will become exercisable on
or before August 31, 2002 (60 days subsequent to July 2, 2002) are treated as
outstanding and to be beneficially owned by the person holding the options for
the purpose of computing the percentage ownership of the person and are listed
below under the Number of Shares Underlying Options column below, but those
option shares are not treated as outstanding for the purpose of computing the
percentage ownership of any other person. Unless otherwise indicated, we
believe the stockholders listed below have sole voting or investment power with
respect to all shares listed beside each stockholders name, subject to
applicable community property laws. Unless otherwise indicated, the address of
each listed stockholder is c/o Gadzoox Networks, Inc., 5850 Hellyer Avenue, San
Jose, California 95138.

|                                                |                                                                                                 |                             |  |              |           |            |  |              |   |              |  |            |           |  |  |       |       | 
|----------------------------------------------- | ----------------------------------------------------------------------------------------------- | --------------------------- |  | ------------ | --------- | ---------- |  | ------------ | - | ------------ |  | ---------- | --------- |  |  | ----- | ----- | 
|                                                |                                                                                                 |                             |  | Number of    |           | Number of  |  |              |   |              |  | Percent of
|                                                |                                                                                                 |                             |  | Shares       |           | Shares     |  | Total Shares |   | Shares      
|                                                |                                                                                                 |                             |  | Beneficially |           | Underlying |  | Beneficially |   | Beneficially
|Beneficial Owners                               |                                                                                                 | Owned                       |  | Options      |           | Owned      |  | Owned(%)    
|                                                |                                                                                                 |                             |  |              |           |            |  |             
|5% Stockholders:                                |                                                                                                 |                             |  |              |           |            |  |              |   |              |  |            |           |  |  |      
|                                                | Balch Hill Capital, LLC2778 Green Street
        San Francisco, California 94123(1)             |                             |  | 7,635,000    |           |            |  |             |   |              |  | 7,635,000  |           |  |  | 16.14 |      
|                                                | Entities associated with Galleon Technology                                                     |                             |  |              |           |            |  |              |   |              |  |            |           |  |  |       |      
|                                                | Partners II, L.P.                                                                               |                             |  |              |           |            |  |              |   |              |  |            |           |  |  |       |      
|                                                |                                                                                                 | 135 E. 57th Street          |  |              |           |            |  |              |   |              |  |            |           |  |  |       |       | 
|                                                |                                                                                                 | New York, New York 10022(2) |  |              | 4,959,753 |            |  |              |  |              |  |            | 4,959,753 |  |  |       | 10.48 | 
|                                                | Berg & Berg Enterprises, LLC
        10050 Bandley Drive
        Cupertino, California 95014(3) |                             |  |             |           |            |  | 6,587,615    |   |              |  | 6,587,615  |           |  |  | 12.22 |      
|Current Directors and Named Executive Officers: |                                                                                                 |                             |  |              |           |            |  |              |   |              |  |            |           |  |  |      
|                                                | Stephen Dalton                                                                                  |                             |  |             |           |            |  | 793,124      |   |              |  | 793,124    |           |  |  | 1.65  |      
|                                                | Barbara Velline                                                                                 |                             |  |             |           |            |  | 208,333      |   |              |  | 208,333    |           |  |  | *     |      
|                                                | Gary Kennedy(4)                                                                                 |                             |  | 6,287,300    |           |            |  | 70,000       |   |              |  | 6,357,300  |           |  |  | 13.42 |      
|                                                | Rob Kuhling(5)

c/o ONSET Ventures
2400 Sand Hill Road, Suite 150
Menlo Park, CA 94025          |                             |  | 146,545      |           |            |  | 32,500       |   |              |  | 179,045    |           |  |  | *     |      
|                                                | Sylvia Summers                                                                                  |                             |  |             |           |            |  | 107,500      |   |              |  | 107,500    |           |  |  | *     |      
|                                                | Steven West                                                                                     |                             |  | 27,500       |           |            |  | 107,500      |   |              |  | 135,000    |           |  |  | *     |      

-9-



---



##### Table of Contents



|                                 |                                                                                                                   |       |  |              |  |            |  |              |  |              |  |            |  |  |  |       |   | 
|-------------------------------- | ----------------------------------------------------------------------------------------------------------------- | ----- |  | ------------ |  | ---------- |  | ------------ |  | ------------ |  | ---------- |  |  |  | ----- | - | 
|                                 |                                                                                                                   |       |  | Number of    |  | Number of  |  |              |  |              |  | Percent of
|                                 |                                                                                                                   |       |  | Shares       |  | Shares     |  | Total Shares |  | Shares      
|                                 |                                                                                                                   |       |  | Beneficially |  | Underlying |  | Beneficially |  | Beneficially
|Beneficial Owners                |                                                                                                                   | Owned |  | Options      |  | Owned      |  | Owned(%)    
|                                 |                                                                                                                   |       |  |              |  |            |  |             
|Former Named Executive Officers: |                                                                                                                   |       |  |              |  |            |  |              |  |              |  |            |  |  |  |      
|                                 | Michael Parides                                                                                                   |       |  | 25,500       |  |            |  | 2,501,040    |  |              |  | 2,526,540  |  |  |  | 5.07  |  
|                                 | David Eichler                                                                                                     |       |  |             |  |            |  | 475,000      |  |              |  | 475,000    |  |  |  | *     |  
|                                 | Eric Ottem                                                                                                        |       |  | 11,948       |  |            |  | 185,619      |  |              |  | 197,567    |  |  |  | *     |  
|                                 | Kristin Strout                                                                                                    |       |  |             |  |            |  | 107,813      |  |              |  | 107,813    |  |  |  | *     |  
|                                 | Wayne Rickard                                                                                                     |       |  | 84,000       |  |            |  | 371,520      |  |              |  | 455,520    |  |  |  | *     |  
|                                 | Clark Foy                                                                                                         |       |  | 1,000        |  |            |  |             |  |              |  | 1,000      |  |  |  | *     |  
|                                 | All directors, director nominees, named
executive officers and current executive
officers as a group (12 persons) |       |  | 6,583,793    |  |            |  | 4,959,949    |  |              |  | 11,543,742 |  |  |  | 22.09 | %



---

|*   |  | Less than 1% of the outstanding shares of common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(1) |  | Information with respect to the number of shares beneficially owned is
based solely on (i) the Schedule 13G/A filed with the SEC on February 1,
2002 and (ii) the Form 4 filed with the SEC on May 9, 2002 by Balch Hill
Capital, LLC, Balch Hill Partners, L.P. and Simon J. Michael. Balch Hill
Capital is a registered investment adviser whose clients have the right to
receive or the power to direct the receipt of dividends from, or the
proceeds from the sale of, the shares beneficially owned. Mr. Michael is
the manager and controlling owner of Balch Hill Capital. The number of
shares beneficially owned includes 7,235,000 shares held directly by Balch
Hill Partners.
|   
|   
|   
|   
|(2) |  | Information with respect to the number of shares beneficially owned is
based solely on written information provided to us by the entities
associated with Galleon Technology Partners II, L.P. in September 2001 and
is consistent with information provided to us by our transfer agent in May
2002. Includes 112,000 shares held by Galleon Technology Partners, L.P.,
26,600 shares held by Galleon Technology Partners I, L.P., 1,040,000
shares held by Galleon Technology Partners II, L.P., 666,700 shares held
by Galleon Management, L.P.; 2,654,700 shares held by Galleon Technology
Offshore Ltd.; and 459,753 shares held by Admirals, L.P.                                   
|   
|   
|   
|   
|(3) |  | Information with respect to the number of shares beneficially owned is
based solely on the Schedule 13D filed with the SEC by Berg & Berg
Enterprises on February 5, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|   
|   
|   
|(4) |  | Information with respect to the number of shares beneficially owned is
based solely on the Schedule 13G/A filed with the SEC by Gary Kennedy,
TTEE, Kennedy Family Charitable Remainder UniTrust dated 10/31/00 and Gary
Kennedy, TTEE, Kennedy Family Revocable Trust dated 10/27/99 on February
14, 2002. The number of shares beneficially owned includes 5,330,000
shares held by Gary Kennedy, TTEE, Kennedy Family Charitable Remainder
UniTrust dated 10/31/00 and 957,300 shares held by Gary Kennedy, TTEE,
Kennedy Family Revocable Trust dated 10/27/99. Mr. Kennedy is the trustee
and a beneficiary under each of the trusts.                                                 
|   
|   
|   
|   
|(5) |  | Mr. Kuhling is a general partner of ONSET Ventures and a director of the
Company. The number of shares beneficially owned includes 83,190 shares
held by ONSET Enterprise Associates II and 63,355 shares held by Robert
Frank Kuhling, Jr. and Michele Denise Wilcox, Co-Trustees of the
Kuhling-Wilcox 1990 Trust. Mr. Kuhling disclaims beneficial ownership of
shares held by these entities, except for the proportional interest
resulting from his partnership interest in such funds.                                                                                                                                                                                              

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Securities Authorized for Issuance Under Equity Compensation Plans

The following table summarizes the number of securities outstanding and
reserved for issuance under our stockholder approved option plans and under our
2000 Nonstatutory Option Plan at March 31, 2002.

|                                                           |  |                         |            |                      |  |                         |       |  |  |                      |           | 
|---------------------------------------------------------- |  | ----------------------- | ---------- | -------------------- |  | ----------------------- | ----- |  |  | -------------------- | --------- | 
|                                                           |  |                         |            |                      |  |                         |       |  |  | Number of Securities
|                                                           |  | Number of Securities To |            | Weighted Average     |  | Remaining Available for
|                                                           |  | Be Issued Upon Exercise |            | Exercise Price of    |  | Future Issuance Under  
|                                                           |  | of Outstanding Options, |            | Outstanding Options, |  | Equity Compensation    
|Plan Category                                              |  | Warrants and Rights     |            | Warrants and Rights  |  | Plans                  
|                                                           |  |                         |            |                      |  |                        
|Equity Compensation
Plans Approved by
Security Holders     |  |                         | 5,860,264  |                      |  | $                       | 7.041 |  |  |                      | 1,555,051 | 
|Equity Compensation
Plans Not Approved
by Security Holders |  |                         | 7,466,986  |                      |  | $                       | 1.772 |  |  |                      | 3,297,263 | 
|Total:                                                     |  |                         | 13,327,250 |                      |  | $                       | 4.177 |  |  |                      | 4,852,314 | 

We grant stock options to purchase our common stock to our employees,
directors and consultants under various stock option plans. With the exception
of the 2000 Nonstatutory Stock Option Plan, all of the plans have been approved
by our board of directors and by our stockholders. Our stockholder-approved
plans include our 1999 Employee Stock Purchase Plan, 1993 Stock Option Plan,
1999 Director Stock Option Plan, and the SmartSAN 1998 Equity Incentive Plan.
In June 2000, our board of directors approved and adopted the 2000 Nonstatutory
Stock Option Plan.

In accordance with the terms of our option plans (including the 2000
Nonstatutory Stock Option Plan), unless specifically approved by our board of
directors on an exception basis, all incentive and non-statutory stock option
grants must be at prices of at least 100% or 85%, respectively, of the fair
market value of the stock on the date of the grant, as determined by our board
of directors. With the exception of certain stock option grants in December
2001 and January 2002 which were issued at prices below the fair market value,
all stock option grants during fiscal 2002 were at 100% of the fair market
value of the stock on the date of the grant. The options are exercisable as
determined by the board of directors. Generally, stock options granted vest
ratably on a monthly basis over a four-year period. However, as part of
efforts to retain valuable employees in the wake of the reductions in staff
that have taken place beginning in March 2001, stock options granted subsequent
to November 2001 have vested on a monthly basis over six to twelve month
periods. The options expire upon the earlier of ten years from the date of
grant or ninety days following termination of employment. Stock purchase
rights granted under the plans must be exercised within ninety days from the
date of grant. Shares purchased pursuant to the grant of a stock purchase
right shall be subject to repurchase, and the repurchase option shall lapse at
a minimum rate of 20% per year.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Since the beginning of our last fiscal year, there has not been nor is
there currently proposed any transaction or series of similar transactions to
which we were or will be a party in which the amount involved exceeds $60,000
and in which any director, executive officer, holder of more than 5% of the
common stock of the Company or any member of the immediate family of any of the
foregoing persons had or will have a direct or indirect material interest other
than (1) compensation agreements and other arrangements, which are described in
Item 11 under the caption Change of Control, Severance and Consulting
Arrangements and (2) the transactions described below.

Convertible Note Held By Berg & Berg Enterprises

On January 23, 2002, we entered into a 2.5% Senior Secured Convertible
Debenture with Berg & Berg Enterprises, LLC, a California limited liability
company, pursuant to which we borrowed the principle sum of $5,000,000 from
Berg & Berg. The debenture bears interest at the rate of 2.5% per annum,
compounded quarterly. The principle and accrued interest under the debenture
shall become due on January 23, 2005. The funds received under the debenture
will be used for working capital in the ordinary course of our business. In
connection with the debenture, we entered into a security agreement with Berg &
Berg under which we granted Berg & Berg a security interest in all of our
assets, including both tangible and intangible assets. Berg & Berg is an
affiliated entity of the landlord of our headquarters facility.

According to the terms of the debenture, Berg & Berg has the option to
convert the principle amount outstanding under such debenture into shares of
our common stock at the conversion price of $0.759 per share. Accordingly, the
maximum number of shares of common stock issuable upon conversion of the
proposed indebtedness under the debenture is 6,587,615 shares.

Private Placements

In May 2001, the Company sold 5.6 million shares of its common stock in a
private placement transaction and received net proceeds from this sale of $14.5
million. Entities associated with Balch Hill Capital, LLC and Galleon
Technology Partners II, L.P., certain of our 5% stockholders, participated in
this transaction. The registration rights agreement that the Company entered
into with its May 2001 investors contain provisions requiring the Company to
pay penalties unless a registration statement covering the resale of these
shares was declared effective by the SEC no later than 90 days after the
Companys sale of the common stock to the investors. The Company filed a
registration statement covering the resale of these shares on July 9, 2001 and
the SEC declared this registration statement effective on November 9, 2001. As
a result of the delay in having the registration statement declared effective
by the SEC, the Company incurred $370,000 in penalties as of October 23, 2001
(the last relevant penalty assessment date). The $370,000 in penalties was paid
out in November 2001 to investors and is recorded as a dividend related to
common stock and shown on the Condensed Statement of Operations in determining
the Net Loss attributable to common stockholders.

In August 2001, the Company sold 5.0 million shares of its common stock in
a private placement transaction and received net proceeds from this sale of
$7.3 million. Entities associated with Balch Hill Capital, LLC and Galleon
Technology Partners II, L.P., certain of our 5% stockholders, participated in
this transaction.

On January 23, 2002, the Company sold 7,825,000 shares of its common stock
in a private placement transaction at a per share purchase price of $0.50,
resulting in gross proceeds to the Company of $3.9 million. Entities
associated with Balch Hill Capital, LLC and Gary Kennedy, certain of our 5%
stockholders, participated in this transaction. Gary Kennedy joined our board
of directors in May 2002.

The proceeds received from the sale of the shares will be used for working
capital purposes.

Indemnification

We have entered into indemnification agreements with each of our directors
and officers. Such indemnification agreements require us to indemnify our
directors and officers to the fullest extent permitted by Delaware law.

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Conflict of Interest Policy

We believe that all transactions with affiliates described above were made
on terms no less favorable than could have been obtained from unaffiliated
third parties. Our policy is to require that a majority of the independent and
disinterested outside directors on our board of directors approve all
transactions between us and our officers, directors, principal stockholders and
their affiliates. Such transactions will continue to be on terms no less
favorable than we could obtain from unaffiliated third parties.

All future transactions, including loans, between us and our officers,
directors, principal stockholders and their affiliates will be approved by a
majority of our board of directors, including a majority of the independent and
disinterested outside directors, and will continue to be on terms no less
favorable than could be obtained from unaffiliated third parties.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

| |                                                                                    |                    
| | ---------------------------------------------------------------------------------- | -------------------
| | GADZOOX NETWORKS, INC.                                                            
|
| | By:                                                                                | /s/  STEPHEN DALTON
| |                                                                                   
| | Stephen Dalton
President and Chief Executive Officer
(Principal Executive Officer)

Dated: July 29, 2002

Pursuant to the requirements of the Exchange Act, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.

|                                      |  |                                                                                                  |  |              
|------------------------------------- |  | ------------------------------------------------------------------------------------------------ |  | -------------
|Name                                  |  | Title                                                                                            |  | Date         
|                                      |  |                                                                                                  |  |              
|                                     
|/s/  STEPHEN DALTON
Stephen Dalton    |  | President, Chief Executive Officer and Director
(Principal Executive Officer)                    |  | July 29, 2002
|                                     
|/s/  BARBARA VELLINE*
Barbara Velline |  | Vice President, Finance and Chief Financial Officer
(Principal Financial and Accounting Officer) |  | July 29, 2002
|                                     
|/s/  ROBERT KUHLING*
Robert Kuhling   |  | Director                                                                                         |  | July 29, 2002
|                                     
|/s/  STEVEN WEST*
Steven West         |  | Director                                                                                         |  | July 29, 2002
|                                     
|/s/  SYLVIA SUMMERS*
Sylvia Summers   |  | Director                                                                                         |  | July 29, 2002
|                                     
|/s/  GARY KENNEDY*
Gary Kennedy       |  | Director                                                                                         |  | July 29, 2002



|*By: | /s/  STEPHEN DALTON
        Stephen Dalton
        Attorney-in-fact | 
|---- | ------------------------------------------------------------------- | 

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