**CODE
      OF BUSINESS CONDUCT AND ETHICS**





As
      of
      February 21, 2008




**SCOPE**





This
      Code
      of Business Conduct and Ethics applies to all directors, officers and employees
      of AE Biofuels, Inc. (the “Company”) , as well as to directors, officers and
      employees of each subsidiary of AE Biofuels, Inc. Such directors, officers
      and
      employees are referred to herein collectively as the “Covered Parties.” AE
      Biofuels, Inc. and its subsidiaries are referred to herein collectively as
      the
“Company.”





**PURPOSE.**





The
      Company is proud of the values with which it conducts business. It has and
      will
      continue to uphold the highest levels of business ethics and personal integrity
      in all types of transactions and interactions. To this end, this Code of
      Business Conduct and Ethics serves to (1) emphasize the Company’s commitment to
      ethics and compliance with the law; (2) set forth basic standards of ethical
      and
      legal behavior; (3) provide reporting mechanisms for known or suspected ethical
      or legal violations; and (4) help prevent and detect wrongdoing.





Given
      the
      variety and complexity of ethical questions that may arise in the course of
      the
      Company’s business, this Code of Business Conduct and Ethics can serve only as a
      rough guide. Confronted with ethically ambiguous situations, the Covered Parties
      should remember the Company’s commitment to the highest ethical standards and
      seek advice from supervisors, managers or other appropriate personnel to ensure
      that all actions they take on behalf of the Company honor this commitment.





**ETHICAL
      STANDARDS**




1. Conflicts
      of Interest .
      A
      conflict of interest exists when a person’s private interest interferes in any
      way with the interests of the Company. A conflict can arise when a Covered
      Party
      takes actions or has interests that may make it difficult to perform his or
      her
      work for the Company objectively and effectively. Conflicts of interest may
      also
      arise when a Covered Party, or members of his or her family, receives improper
      personal benefits as a result of his or her position at the Company. Loans
      to,
      or guarantees of obligations of, Covered Parties and their family members may
      create conflicts of interest. It is almost always a conflict of interest for
      a
      Covered Party to work simultaneously for a competitor, customer or
      supplier.







AE
      Biofuels, Inc.


Code
      of
      Business Conduct and Ethics


Page
      2 of
      5








Conflicts
      of interest may not always be clear-cut, so if you have a question, you should
      consult with your supervisor or manager or, if circumstances warrant, the Chief
      Financial Officer or Chief Legal Officer of the Company. Any Covered Party
      who
      becomes aware of a conflict or potential conflict should bring it to the
      attention of a supervisor, manager or other appropriate personnel or consult
      the
      procedures described in Violations of Ethical Standards below.




All
      directors and executive officers of the Company or its subsidiaries shall
      disclose any material transaction or relationship that reasonably could be
      expected to give rise to such a conflict to the Chairman of the Company’s Audit
      Committee. No action may be taken with respect to such transaction or party
      unless and until such action has been approved by the Audit Committee.




2. Corporate
      Opportunities .
      Covered
      Parties are prohibited from taking for themselves opportunities that are
      discovered through the use of corporate property, information or position
      without the consent of the Board of Directors of the Company. No Covered Party
      may use corporate property, information or position for improper personal gain
      and no employee may compete with the Company directly or indirectly. Covered
      Parties owe a duty to the Company to advance its legitimate interests whenever
      possible.




3. Fair
      Dealing .
      Covered
      Parties shall behave honestly and ethically at all times and with all people.
      They shall act in good faith, with due care, and shall engage only in fair
      and
      open competition, by treating ethically competitors, suppliers, customers,
      and
      colleagues. Stealing proprietary information, possessing trade secret
      information that was obtained without the owner’s consent, or inducing such
      disclosures by past or present employees of other companies is prohibited.
      No
      Covered Party should take unfair advantage of anyone through manipulation,
      concealment, abuse of privileged information, misrepresentation of material
      facts, or any other unfair practice.




The
      purpose of business entertainment and gifts in a commercial setting is to create
      good will and sound working relationships, not to gain unfair advantage with
      customers. No gift or entertainment should ever be offered or accepted by a
      Covered Party or any family member of a Covered Party unless it (1) is
      consistent with customary business practices, (2) is not excessive in value,
      (3)
      cannot be construed as a bribe or payoff and (4) does not violate any laws
      or
      regulations. The offer or acceptance of cash gifts by any Covered Party is
      prohibited. Covered Parties should discuss with their supervisors, managers
      or
      other appropriate personnel any gifts or proposed gifts which they think may
      be
      inappropriate.




4. Insider
      Trading .
      Covered
      Parties who have access to confidential information are not permitted to use
      or
      share that information for stock trading purposes or for any other purpose
      except the conduct of the Company’s business. All non-public information about
      the Company should be considered confidential information. It is always illegal
      to trade in the Company’s securities while in possession of material, non-public
      information, and it is also illegal to communicate or “tip” such information to
      others.







AE
        Biofuels, Inc.
 Code
        of
        Business Conduct and Ethics
 Page
        3 of
        5







5. Confidentiality .
      Covered
      Parties must maintain the confidentiality of confidential information entrusted
      to them, except when disclosure is authorized by an appropriate legal officer
      of
      the Company or required by laws or regulations. Confidential information
      includes all non-public information that might be of use to competitors or
      harmful to the Company or its customers if disclosed. It also includes
      information that suppliers and customers have entrusted to the Company. The
      obligation to preserve confidential information continues even after employment
      ends.




6. Protection
      and Proper Use of Company Assets .
      All
      Covered Parties should endeavor to protect the Company’s assets and ensure their
      efficient use. Theft, carelessness, and waste have a direct impact on the
      Company’s profitability. Any suspected incident of fraud or theft should be
      immediately reported for investigation. The Company’s equipment should not be
      used for non-Company business, though incidental personal use is permitted.




The
      obligation of Covered Parties to protect the Company’s assets includes its
      proprietary information. Proprietary information includes intellectual property
      such as trade secrets, patents, trademarks, and copyrights, as well as business,
      marketing and service plans, engineering and manufacturing ideas, designs,
      databases, records, salary information and any unpublished financial data and
      reports. Unauthorized use or distribution of this information would violate
      Company policy. It could also be illegal and result in civil or criminal
      penalties.





7. Compliance
      with Laws, Rules and Regulations .
      Obeying
      the law, both in letter and in spirit, is the foundation on which the Company’s
      ethical standards are built. In conducting the business of the Company, the
      Covered Parties shall comply with applicable governmental laws, rules and
      regulations at all levels of government in the United States and in any non-U.S.
      jurisdiction in which the Company does business. Although not all Covered
      Parties are expected to know the details of these laws, it is important to
      know
      enough about the applicable local, state and national laws to determine when
      to
      seek advice from supervisors, managers or other appropriate personnel.




8. Timely
      and Truthful Public Disclosure .
      In
      reports and documents filed with or submitted to the Securities and Exchange
      Commission and other regulators by the Company, and in other public
      communications made by the Company, the Covered Parties involved in the
      preparation of such reports and documents (including those who are involved
      in
      the preparation of financial or other reports and the information included
      in
      such reports and documents) shall make disclosures that are full, fair,
      accurate, timely and understandable. Where applicable, these Covered Parties
      shall provide thorough and accurate financial and accounting data for inclusion
      in such disclosures. They shall not knowingly conceal or falsify information,
      misrepresent material facts or omit material facts necessary to avoid misleading
      the Company’s independent public auditors or investors.





9. Significant
      Accounting Deficiencies .
      The
      Chief Executive Officer and each senior financial officer shall promptly bring
      to the attention of the Audit Committee any information he or she may have
      concerning (a) significant deficiencies in the design or operation of internal
      control over financial reporting which could adversely affect the Company’s
      ability to record, process, summarize and report financial data or (b) any
      fraud, whether or not material, that involves management or other employees
      who
      have a significant role in the Company’s financial reporting, disclosures or
      internal control over financial reporting.







AE
      Biofuels, Inc.


Code
      of
      Business Conduct and Ethics


Page
      4 of
      5





**WAIVERS**




Any
      waiver of this Code for executive officers or directors may be made only by
      the
      Company’s Board of Directors or its Audit Committee and will be promptly
      disclosed as required by law or stock exchange regulation.





**VIOLATIONS
      OF ETHICAL STANDARDS**




1. Reporting
      Known or Suspected Violations .
      All
      Covered Parties shall promptly report any known or suspected violations of
      this
      Code to the Chairman or any other member of the Company’s Audit Committee. No
      retaliatory action of any kind will be permitted against anyone making such
      a
      report in good faith, and the Company’s Audit Committee will strictly enforce
      this prohibition.




2. Accountability
      for Violations .
      If the
      Company’s Audit Committee or its designee determines that this Code has been
      violated, either directly, by failure to report a violation, or by withholding
      information related to a violation, the offending Covered Party may be
      disciplined for non-compliance with penalties up to and including removal from
      office or dismissal. Such penalties may include written notices to the
      individual involved that a violation has been determined, censure by the Audit
      Committee, demotion or re-assignment of the individual involved and suspension
      with or without pay or benefits. Violations of this Code may also constitute
      violations of law and may result in criminal penalties and civil liabilities
      for
      the offending Covered Party and the Company. All Covered Parties are expected
      to
      cooperate in internal investigations of misconduct.





**COMPLIANCE
      PROCEDURES**




We
      must
      all work together to ensure prompt and consistent action against violations
      of
      this Code. In some situations, however, it is difficult to know if a violation
      has occurred. Because we cannot anticipate every situation that will arise,
      it
      is important that we have a way to approach a new question or problem. These
      are
      the steps to keep in mind:




·
            Make
                sure you have all the facts. In order to reach the right solutions,
                we
                must be as informed as possible.





·
            Ask
                yourself: What specifically am I being asked to do? Does it seem
                unethical
                or improper? Use your judgment and common sense. If something seems
                unethical or improper, it probably is.





·
            Clarify
                your responsibility and role. In most situations, there is shared
                responsibility. Are your colleagues informed? It may help to get
                others
                involved and discuss the problem.





·
            Discuss
                the problem with your supervisor. This is the basic guidance for
                all
                situations. In many cases, your supervisor will be more knowledgeable
                about the questions, and he or she will appreciate being consulted
                as part
                of the decision-making process.







AE
        Biofuels, Inc.
 Code
        of
        Business Conduct and Ethics
 Page
        5 of
        5





·
            Seek
                help from Company resources. In rare cases where it would be inappropriate
                or uncomfortable to discuss an issue with your supervisor, or where
                you
                believe your supervisor has given you an inappropriate answer, discuss
                it
                locally with your office manager or your human resources manager.





·
            You
                may report ethical violations in confidence without fear of retaliation.
                If your situation requires that your identity be kept secret, your
                anonymity will be protected to the maximum extent consistent with
                the
                Company’s legal obligations. The Company in all circumstances prohibits
                retaliation of any kind against those who report ethical violations
                in
                good faith.





·
            Ask
                first, act later. If you are unsure of what to do in any situation,
                seek
                guidance before you act.


***







**ACKNOWLEDGMENT
      AND CERTIFICATION**




The
      undersigned hereby acknowledges and certifies that the undersigned:






Has
      received, read and understands the AE Biofuels, Inc. Code of Business Conduct
      and Ethics (the “Code of Ethics”).




Will
      continue to comply fully with the Code of Ethics for as long as the undersigned
      is subject to the policy.




Date:
              
              
              Signature:Print
                  Name: