FOR IMMEDIATE RELEASE

 PET QUARTERS, INC. FILES COMPLAINT AGAINST

THE DEPOSITORY TRUST AND CLEARING CORPORATION,

THE DEPOSITORY TRUST COMPANY AND

THE NATIONAL SECURITIES CLEARING CORPORATION

Company seeks over $400,000,000 in damages

Sherwood, ARKANSAS- November 12, 2004- Pet Quarters Inc. (OTC:PDEN.PK), formerly a mail-order catalog and internet based pet supply company based in Lonoke, Arkansas, announced today that it and several individual shareholders, filed a complaint against The Depository Trust and Clearing Corporation (DTCC), The Depository Trust Company (DTC) and The National Securities Clearing Corporation (NSCC) in the Circuit Court of Pulaski County, Arkansas, Sixth Division. The Plaintiffs are represented by the law firms of O'Quinn, Laminack & Pirtle, Christian Smith & Jewell, and Heard, Robins, Cloud, Lubel & Greenwood, LLP, all of Houston, Texas and Eichenbaum, Liles & Heister, PA of Little Rock, Arkansas.

The complaint alleges that the DTCC, the NSCC and the DTC acted in concert to allow an increase in the supply of stock through the Stock Borrow Program, causing downward pressure on the price of Pet Quarters (PQI) stock. It further alleges that the Defendants permitted sellers of PQI shares to maintain significant open "fail to deliver" positions of millions of shares of PQI stock for extended periods of time. Attorney Sean Greenwood said: "We believe that the price of PQI stock fell because the Defendants- through their operation of the Stock Borrow Program- manipulated and allowed the manipulation of PQI stock by various sellers who failed to deliver PQI shares." By covering open "fail to deliver" positions with shares borrowed through the Stock Borrow Program and delivering the borrowed shares to the buyers, the complaint alleges, the Defendants artificially created unregistered, free trading PQI shares and increased the supply of PQI shares in the marketplace without authority. Attorney Adam Voyles said: "It is our belief that the artificially increased supply of PQI shares in the marketplace has significantly decreased the value of PQI stock."

Steve Dempsey, Chairman and CEO of PQI said: "We relied on the Defendants’ representation that they use the Stock Borrow Program to efficiently settle and clear trades." Co-founder Mike Parnell added: "Their mishandling of these shares and resulting misrepresentations are unacceptable." Attorney John O’Quinn commented: "The deeper my team and I dig into these cases, the more outraged I become. Honest American entrepreneurs have been subjected to scandalous behavior and abandoned by organizations that should be protecting them."

CONTACT:
Ivan Kronenfeld
Koerner Kronenfeld Partners, LLC
Tel: 1-212-448-9141
Email: ikronenfeld@kswny.com

SOURCE: Pet Quarters Inc.

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