Gadzoox Networks Works Quickly Towards Goal of Approved Financial Reorganization

Company Relocates Headquarters and Generates $2.7 Million Annual Savings

San Jose, Calif. — October 8, 2002 — Gadzoox Networks, Inc. (OTC:ZOOX), a global supplier of innovative Storage Area Network (SAN) products, today provided updates on the company’s actions towards approved financial reorganization of the Company and completion of milestones in the reorganization process.

Just four weeks after filing for debt restructuring, the Company received approval from the court for a number of motions. The motions approved include: continued payment of salaries and benefits for employees, the relocation of the company’s headquarters, the termination of the previous lease agreement and sale of excess inventory, equipment and furniture. Additionally the Company presented to the court the first phase of its business plan for moving the Company forward.

“Our growing success with our new FabriCore Engines‘ product line, incorporating the solid Fibre Channel technology Gadzoox Networks was built on, has enabled us to effectively present a fiscally strong company with exceptional potential for growth,” said Steve Dalton, President and CEO of Gadzoox Networks. ”We have set a fast pace for ourselves in order to quickly reorganize and move this Company to the next phase. The relocation of our headquarters is a significant step that favorably impacts our bottom line enabling us to reduce expenses and conserve cash reserves.”

Recognizing Results of Financial Reorganization Efforts
The termination of the previous lease agreement, combined with the relocation of the Company’s headquarters, reduces the Company’s operating expenses by approximately $2.7 million annually. The Company’s headquarters are now located at 2902 Stender Way in Santa Clara California, in the “center of Silicon Valley”.

“Over the past few weeks our customers and suppliers have continued to demonstrate support for the Company. We have doubled our customer engagements for FabriCore Engines, validating the demand for our field-proven Fibre Channel technology,” stated Dalton. “Our relationships with our key suppliers and strategic partners remain strong as we reorganize to position the Company for success.”

About Gadzoox Networks
Since 1996 Gadzoox Networks has led the industry in market “firsts” and continues to drive the Storage Area Network (SAN) edge market with innovative Fibre Channel switching technology. The company has consistently delivered a time to market advantage to major OEM customers enabling them to create clear business value for their customer base. Gadzoox Networks is a voting member of the Storage Networking Industry Association (SNIA), with corporate headquarters located in Santa Clara, California. For more information about Gadzoox Networks' products and technology advancements in the SAN industry, visit the company's Web site at http://www.gadzoox.com.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Specifically, statements concerning the likelihood of success of the Company's financial reorganization efforts, the pace with which the reorganization takes place, court approval of outstanding motions, the Company’s ability to reduce overhead expenses, the anticipated success of the FabriCore Engines product line, anticipated customer demand for the Company's products, the Company's ability to close new business with respect to our FabriCore Engines products and services, anticipated customer demand for the Company's Fibre channel technology, and the Company's continued strong relationships with its key suppliers and strategic partners are forward-looking statements within the meaning of the Safe Harbor. Actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including but not limited to, the inherent uncertainty with the reorganization process, including the speed at which court orders are approved or other events occur, the ability of the Company to control and reduce expenses, the evolution of the SAN market, growth rates of the market segment within which the Company participates; market acceptance of the Company's new products, in particular the Slingshot Family of Switches, the Slingshot-ES Embedded platform, and the FabriCore Engines suite of technology, and the speed at which customers adopt current and new products for SANs; the Company's dependence on a limited number of products, a significant portion of which are sold to a limited number of partners including OEM and distribution channel partners; the availability of capital and the Company's ability to meet future capital requirements; competition in the Company's industry and the timing of new technology and product introductions, the additional development and deployment of embedded fabric switches and other future products; the ability to retain and hire skilled personnel; the ability to maintain and develop new supplier and strategic partner relationships; and the Company's dependence on its contract manufacturer. These forward-looking statements are made only as of the date hereof, and we disclaim any obligation to update or revise the information contained in any forward- looking statements, whether as a result of new information, future events or otherwise.

Gadzoox and the Gadzoox logo are registered trademarks of Gadzoox Networks, Inc. All other trademarks are property of their respective owners.