UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

                   For the fiscal year ended December 31, 2008

                                       or

[ ] 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 001-32220
                                               ---------


                             PRIME STAR GROUP, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its Charter)

                         Nevada                              87-0636498
            (State or other jurisdiction of               (I.R.S. Employer
             incorporation or organization)             Identification No.)

                 650 Oakmont Unit 2110, Las Vegas, Nevada 89109
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (702) 497-0736

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

           Securities registered pursuant to Section 12(g) of the Act:

                         Common Stock, $0.001 par value
                                (Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. [ ] Yes [x] No

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Act. [ ] Yes [x] No

Indicate by check mark whether the registrant (1) has filed all reports 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 periods
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. [x] Yes [ ] No

<PAGE>

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 herein,
to the best of 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. [ ]

Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated  filer, a non-accelerated  filer, or a smaller reporting company.
See the  definitions  of "large  accelerated  filer,"  "accelerated  filer"  and
"smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]       Accelerated filer [ ]
Non-accelerated filer [ ]         Smaller reporting company [x]

Indicate by check mark whether the registrant is a shell company. [ ] Yes [x] No

The aggregate market value of the voting and non-voting common equity held
by  non-affiliates  of the  registrant  on  April  13,  2009  was  approximately
$373,076.

The registrant had 1,716,678 shares of common stock and 0 shares of
preferred stock outstanding as of April 9, 2009.

<PAGE>


                                TABLE OF CONTENTS
                                -----------------
<TABLE>
<CAPTION>
<S>  <C>                                                                                                          <C>

                                                                                                             Page
                                                                                                            --------

PART I
------

ITEM 1       BUSINESS                                                                                             1
------       --------

ITEM 1A      RISK FACTORS                                                                                         5
-------      ------------

ITEM 1B      UNRESOLVED STAFF COMMENTS                                                                            5
-------      -------------------------

ITEM 2       PROPERTIES                                                                                           5
------       ----------

ITEM 3       LEGAL PROCEEDINGS                                                                                    5
------       -----------------

ITEM 4       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                  6
------       ---------------------------------------------------

PART II
-------

ITEM 5       MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES      6
------       -----------------------------------------------------------------------------------------------

ITEM 6       SELECTED FINANCIAL DATA                                                                              9
------       -----------------------

ITEM 7       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                9
------       -------------------------------------------------------------------------------------

ITEM 7A      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                          17
-------      ----------------------------------------------------------

ITEM 8       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                         18
------       -------------------------------------------

ITEM 9       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                33
------       ------------------------------------------------------------------------------------

ITEM 9A      CONTROLS AND PROCEDURES                                                                             33
-------      -----------------------


ITEM 9B      OTHER INFORMATION                                                                                   34
-------      -----------------

PART III
--------

ITEM 10      DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE                                             35
-------      -------------------------------------------------------

ITEM 11      EXECUTIVE COMPENSATION                                                                              36
-------      ----------------------

ITEM 12      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS      37
-------      ----------------------------------------------------------------------------------------------

ITEM 13      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE                           37
-------      -------------------------------------------------------------------------
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
<S>  <C>                                                                                                         <C>
ITEM 14      PRINCIPAL ACCOUNTING FEES AND SERVICES                                                              37
-------      --------------------------------------

PART IV
-------

ITEM 15      EXHIBITS, FINANCIAL STATEMENT SCHEDULES                                                             38
-------      ---------------------------------------

SIGNATURES                                                                                                       39
----------

CERTIFICATIONS                                                                                                   40
--------------
</TABLE>

<PAGE>



PART I

ITEM 1.          BUSINESS

Business Development

Prime Star Group, Inc. (formerly American Water Star Inc) was incorporated as
American Career Centers, Inc., in the State of Nevada on June 15, 1999. The
purpose of the company was to serve as a holding company for the acquisition of
information technology career training centers and related businesses. Effective
December 3, 1999, American Water Star acquired 100% of the outstanding shares of
Tunlaw Capital Corporation, a publicly-held reporting company, in exchange for
an aggregate of 200,000 shares of common stock, with Tunlaw becoming a
wholly-owned subsidiary. With the completion of this acquisition, American Water
Star became the successor issuer to Tunlaw, and retained public company
reporting status under the Exchange Act. Tunlaw has had no operations to date
and is inactive.

On April 2, 2002, we authorized the amendment to American Career Centers, Inc.'s
Articles of Incorporation to change its name to American Water Star, Inc., to
reflect the significant change in our character and strategic focus relating to
our water bottling and distribution business. Subsequent to our name change we
pursued the acquisition of Water Star Bottling, Inc. as the basis of our new
business plan. We later voided the acquisition and have since filed an
involuntary bankruptcy petition against Water Star Bottling. On April 11, 2009
American Water Star, Inc. amended its name to Prime Star Group, Inc.

Acquisition of New Age Packaging, Inc.
--------------------------------------

On December 23, 2002, we completed the acquisition of New Age Packaging, Inc.
(then known as American Distribution & Packaging, Inc.), a privately-held Nevada
corporation ("New Age"). Pursuant to that Agreement, New Age exchanged 100% of
its outstanding common stock for 5,200,000 newly issued shares of our common
stock, which was issued to former officers and directors of American Water Star
whom were principals of New Age pre-merger. Upon completion of the acquisition,
New Age became a wholly-owned subsidiary of American Water Star.

Although the consideration exchanged in the New Age acquisition was not
negotiated at "arms-length," our directors and executive officers deemed it
reasonable based on certain criteria, such as the valuation of the assets of New
Age; New Age's current and historical business operations; the potential of New
Age; and the potential benefit to our stockholders. Our directors determined
that the consideration for the exchange was reasonable under these
circumstances.

New Age is developing a packaging process that will be an alternative to
traditional plastic bottles, glass containers and aluminum cans. This process
requires alternative manufacturing and distribution coordination as compared to
traditional bottling procedures.

All of the original equipment owned by New Age was designed to be used in the
production of bottled beverages; accordingly, it was transferred as a dividend
to American Water Star in early 2003. In December of 2003, our Board of
Directors declared a dividend to stockholders of record as of March 15, 2004, in
the form of all of the common stock of New Age. Due to American Water Star's
issues with its loans with Laurus Master Fund and the delisting of our
securities from the American Stock Exchange, we have not been able to effectuate
the distribution of the NAP shares. We still believe the anticipated business
model for NAP is not compatible with our current operations and we believe that
the divestiture will have little impact on our future operations.

Acquisition of All-Star Beverages, Inc.
---------------------------------------

On December 24, 2002, we completed the acquisition of All-Star Beverages, Inc.,
a privately-held Nevada corporation ("All-Star"), pursuant to an Acquisition
Agreement dated as of September 6, 2002. Pursuant to that Agreement, All-Star
exchanged 100% of its outstanding common stock for 12,645,824 newly issued
shares of our common stock. Roger Mohlman, our current CEO and Chairman,
received 11,103,433 of the shares issued in the exchange. Upon completion of the
acquisition, All-Star became a wholly-owned subsidiary of American Water Star.

                                       1
<PAGE>

Although the consideration exchanged in the All-Star acquisition was not
negotiated at "arms-length," our directors and executive officers deemed it
reasonable based on certain criteria such as the valuation of the assets of
All-Star; All-Star's current and historical business operations; the potential
of All-Star; and the potential benefit to our stockholders. Our directors
determined that the consideration for the exchange was reasonable under these
circumstances.

The majority of our operations were conducted through All-Star. We had
contractual relationships with various independent distributors, brokers, both
single and multi-location retail operations, and governmental agencies
throughout the United States.

As a result of the All-Star and New Age acquisitions, the former stockholders of
All-Star and New Age became the controlling stockholders of Prime Star Group.

Acquisition of Colorado River Distributors ("C.R.D."), Nevada Division:
----------------------------------------------------------------------

During the first quarter of 2005, we entered into an agreement to purchase from
Colorado River Distributors, LLC, the distribution rights of their Nevada
Division. In addition to purchasing the distribution rights, we purchased the
existing inventory of their Nevada Division. Colorado River Distributors has
distributing agreements for the paper products of Arrowhead Water, Coca Cola,
Gatorade, and Tropicana. Upon this acquisition, we established a new subsidiary;
C.R.D. of Nevada, in which we incorporated the operations of Colorado River
Distributors' Nevada Division and consolidated the business with our operations
in Las Vegas, Nevada.

Additional Subsidiaries of PRIME STAR GROUP, INC..
-------------------------------------------------

With the purchase and completion of the three plants in the United States,
separate Nevada corporations were incorporated for each plant. These
corporations only held the physical assets of each plant. The following is a
list of all subsidiaries of American Water Star owned as of December 31, 2005.
Due to the defaults with Laurus Master Fund, which is described in more detail
below, we lost all assets owned by the listed subsidiaries and no longer operate
any of the listed entities.

<TABLE>
<CAPTION>
<S>                                          <C>


      Name of Subsidiary           Date of Incorporation          Operating Status
---------------------------------------------------------------------------------------

All Star Beverages, Arizona            March 5, 2004                   Revoked
All Star Beverages JAX                January 1, 2004                  Revoked
All Star Beverages Mississippi        August 26, 2004                  Revoked
Hawaiian Tropicals                     March 5, 2004                   Revoked
C.R.D. of Nevada                       March 6, 2005                   Revoked
Tunlaw Capital Corporation               Pre 1999                     Inactive
</TABLE>

Description of Business

Prime Star Group was started as a company that developed, marketed, sold, and
distributed bottled water with four branded beverages: Hawaiian Tropic, Geyser
Fruit, Geyser Sport, and Geyser Fruta. The products were orientated to the
health conscious consumer looking for an alternative to products containing high
sugar and caffeine levels. Our customers included single and multi-store retail
operations, governmental agencies, and distributors who in turn sell to retail
stores, convenience stores, schools and other outlets. In addition, we branched
into the private label and co-packing industries in the fourth quarter of 2004.



                                       2
<PAGE>

We initially sold our products exclusively through distributors who then
supplied our products to retailers. Although we continued to use distributors,
we also expanded our sales effort through sales directly to retailers. As of
December 31, 2005, we sold through distributors and directly to customers.

We hope the private label and co-packaging of beverages for other corporations
allows us to avoid costly marketing expenses that would otherwise be associated
with brand development, launch, and continuing promotions.


Business Plan

Our Company objective is to market a new flexible pouch packaging in the ready
to drink adult beverage market as well as with our popular Geyser flavored
waters. This flexible packaging will also extend into related beverage markets.
PSGI is now prepared to begin operations in its target segment of the adult
beverage (liquor and related) industry, and reestablish their customer base with
their Geyser flavored waters.
The multi-billion dollar liquor industry has companies with a long history of
success and established market share. PSGI does not intend to compete with those
companies or their conventional packaging methods. The Company will enter this
profitable marketplace with a line of exciting new products and with a new and
very unique packaging concept. We will target the high-end market with our own
quality line of distilled spirits alone and with the unique and proprietary soft
pouch is a key element in PSGI's corporate strategy, product line and global
sales and marketing plan for our mixed drinks. This packaging style is embodied
in one of PSGI's customers sales slogans, "It's In The Bag."

The Industry


Pouch Packaging


According to Freedonia Group's Projections , the pouch market will be 6.5
billion inthe U.S. alone by 2010. The global market is estimated to be 21.8
billion in 2005.

If anyone had predicted in 1981 that Kraft's new foil pouch containing all
natural Capri Sun(TM) Juice would begin a packaging revolution others would
surely have jumped on the pouch bandwagon.

A range of factors will contribute to the huge proliferation of this packaging
format. These include; convenience features, market differentiation,
shelf-appeal, price-appeal, increase in the number of new products and faster
inventory turns.

Marketing and Distribution

The Bartender's Choice(TM) product line will initially launch with:

                               o    Classic Margaritas
                               o    Strawberry Margaritas
                               o    Mojitos

The drinks will be packaged individually in a 200ml (6.78 oz) flexible pouch
with a Bartender's Choice Logo along with the flavor and type of beverage
seductively displayed.

The individual servings will then be packaged in 10 serving Party Pack for club
stores and super markets and sold individually at convenience stores as well.

                                       3
<PAGE>

There are a myriad of bottles and jugs that contain liquor, and mixed drinks.
There are bottles of mixes only, liquor only, and mixed drinks. The
manufacturers, shippers, distributors and retailers of these products share a
common situation...how to improve profit, expand and retain market share.
Bottles, glass or plastic, have physical characteristics that define the amount
that can be shipped and displayed in a given space. The PSGI `pouch', or soft
bag, developed and protected by trade secrets is a 200 ml container for
individual ready to drink adult beverages. It consists of several layers of
clear film, one with the artwork, consumer and branding information. The pouch
comes with a drinking straw that is also used to pierce the pouch (anywhere on
the pouch), and drink from it. The film "seals" around the straw so there is no
leakage. A single pouch can be consumed just as it comes by the purchaser,
served as a `perfect mixed drink every time' NO BARTENDER NEEDED(TM). It can
also be poured into other containers such as the typical drink glass in a club,
bar, casino, home or elsewhere for those who do not wish to present or consume
the adult beverage from the pouch itself using the provided straw.

Since alcohol does not freeze, but does become very cold, we've created a
formula that allows the drink to become slushy. The Bartender's Choice pouch
placed in a tub of ice, a store, home or airline freezer becomes a
self-contained, individually chilled adult beverage drink waiting to be
consumed. The additional upside of the pouch for the end user is that the
product is not spoiled if not used or completely consumed. The consumer can just
place the pouch back in the freezer and use when desired. It does not require
typical "shelf-space" to be seen and purchased and, therefore, does not
necessarily have to displace the shelf space other mixed drinks or liquor that
may be available in bottles or cans nor force Bartender's Choice(TM) to compete
with `giants' in the industry for that very expensive shelf space. The soft
Bartender's Choice(TM) pouches can be stored and/or displayed in many ways and
places, such as in large tubs, with or without ice and other trade secret
methods of placement.

A typical Bartender's Choice(TM) Margarita drink placed in a freezer turned to
slush within 45 minutes. When left out at room temperature, it remained slushy
for one hour and 20 minutes and stayed completely cold for an additional 20
minutes. Since no ice is used, the drink does not lose any flavor while the
typical margarita does when the ice melts.

Private Label

PSGI will also offer their cost effective and consumer pouch for other
manufactured  brands in the market that want to take  advantage  of the trend of
adult beverages packaged in pouches.  It is an opportunity for establishments to
put their name as the brand on the product. PSGI does not believe that this will
pose any type of  competitive  threats  to PSGI's  own  brands  because  it is a
controlled   environment   and  we  will  know  their   strategies  and  limited
distribution. More of the same packaging type increases growth in our sector and
does nothing but help PSGI.

Competition

As of this date, PSGI has no real direct competition to its packaging of adult
spirit based beverage in a pouch. Due to the efficiency and low cost
manufacturing of the pouch, PSGI's management believes that it will take a
minimum of two years to compete with PSGI in terms of quality and price.

Intellectual Property

We manufacture, promote and sell our Bartender's Choice(TM) under our
trademark-protected brand,. Depending upon the jurisdiction, trademarks are
valid as long as they are in use and/or their registrations are properly
maintained and they have not been found to have become generic. Registrations of
trademarks can generally be renewed as long as the trademarks are in use.

Employees

As of the date of this Report, has no full-time paid employees. We retain
independent contractors as needed. None of our employees are represented by
labor unions and we believe that our employee relations are satisfactory.

                                       4
<PAGE>



ITEM 1A.       RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities
Exchange Act of 1934 and are not required to provide the information under this
item.

ITEM 1B.       UNRESOLVED STAFF COMMENTS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities
Exchange Act of 1934 and are not required to provide the information under this
item.

ITEM 2.          PROPERTIES

We do not own any real property. Our principal executive offices are located at
650 Oakmont Unit 2110, Las Vegas NV 89109 where we are leasing approximately
2,000 square feet under an agreement that commenced in August 2007 and expires
in July 2011.


ITEM 3.          LEGAL PROCEEDINGS

On November 4, 2005, Laurus notified us that certain defaults had occurred in
the Securities Purchase Agreement, including our failure to make interest
payments on September 1, 2005, October 1, 2005 and November 1, 2005. In
addition, we had failed to make principal and interest payments due to Laurus on
August 1, 2005, September 1, 2005, October 1, 2005 and November 1, 2005. Based
upon the occurrence and continuance of these defaults, Laurus notified us that
they had accelerated the amounts due under the obligations, demanding payment in
full on November 7, 2005 in the amount of $6,694,875. In the event the payment
amount was not received by Laurus, foreclosure proceedings covered by the Deed
of Trust would begin.

Subsequent to November 7, 2005, foreclosure proceedings were begun on all of our
real, personal, tangible, and intangible property, including all buildings,
structures, leases, fixtures, and moveable personal property. On March 2, 2006,
all of the real property was sold through a foreclosure sale, and on March 23,
2006, all personal property was sold through a UCC sale. Pursuant to the Order
of the Court, on or about April 3, 2006, the Superior Court of the State of
Arizona in and for the County of Maricopa approved an order (i) Approving
Receiver's Final Report; (ii) Discharging Receiver; and (iii) Dismissing Case.
Further, the Order of the Court stated as follows: "On March 2, 2006, all of the
real property of the Receivership Property was sold through a foreclosure sale
("Real Property Sale"). Laurus purchased the real property sold at the Real
Property Sale." "On March 23, 2006, all of the personal property of the
Receivership Property was sold through a UCC sale ("Personal Property Sale").
Laurus purchased the personal property sold at the Personal Property Sale."
"Following the Real Property Sale and the Personal Property Sale, substantially
all of the Company's assets have been sold to Laurus." The loss of the assets
included the loss of All Star Beverage, Inc., All Star Beverages Arizona, Inc.,
All Star Beverages Jax, Inc., All Star Beverages Mississippi, Inc., and Hawaiian
Tropicals, Inc.

On April 4, 2004 Michiana Dairy Processors, LLC filed a complaint against
Star Beverages, Inc. (sic) in circuit court in Lake County Indiana, cause number
45C01-0404-PL-00085  which was subsequently  amended to included  American Water
Star, Inc. (now Prime Star Group,  Inc.) and its subsidiary  entities,  All Star
Beverages,  Inc., All Star Beverages of Arizona,  Inc., Geyser Beverages,  Inc.,
Hawaian  Tropicals,  Inc., on March 3, 2009 this case was removed to the Federal
Court of Northern  Indiana,  Hammond  Division  and is awaiting  for a ruling on
Motion to Transfer  Venue.  PSGI intends to defend itself against this frivolous
lawsuit. PSGI believes Michiana Dairy, LLC perpetrated a fraud by not having the
authority to enter into a contract, since it was not licensed to bottle water or
other beverage products in the State of Indiana.


                                       5
<PAGE>



ITEM 4.          SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

We did not submit any matters to a vote of our security holders during the
fourth quarter of the fiscal year 2008.
                                     PART II

ITEM 5.          MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is currently quoted under the symbol "PSGI" on the
over-the-counter ("OTC") Bulletin Board quotation system as of February 2009. In
June of 2004, our common stock was approved for listing and trading on the
American Stock Exchange under the symbol "AMW." Prior to being listed on the
American Stock Exchange, our common stock was quoted on the OTC Bulletin Board
under the symbol "AMWS." Our common stock began being quoted on the OTC Bulletin
Board in December 2000.

On June 18, 2004 we were listed on the American Stock Exchange and therefore the
second quarter includes OTC Bulletin Board high and low bid prices from April 1,
2004 to June 17, 2004 and American Stock Exchange sales prices from June 18,
2004 to June 30, 2004. The third quarter of 2004 lists only the high and low
sales prices as reported by the American Stock Exchange.

On November 23, 2005, we received a letter from the American Stock Exchange
("AMEX") notifying us we were not in compliance with Sections 134, 1003(a)(iv),
and 1101 of AMEX's Company Guide. Pursuant to AMEX's letter we were required to
submit two plans, one by December 9 and the second one by December 23, 2005,
advising AMEX on the action we planned to take to become compliant by January 5,
2006 and February 23, 2006. On January 11, 2006, we received notice from AMEX
that we continued to not be in compliance with their continued listing standards
and that are securities were subject to delisting. As a result of being delisted
from AMEX we are unable to locate historical quotes for that time period.

<TABLE>
<CAPTION>
<S>                                                     <C>                                       <C>

            PERIOD                                       HIGH                                      LOW
2008
--------------------------------
First Quarter                                           $6.00                                     $0.01
Second Quarter                                          $1.00                                     $0.01
Third Quarter                                           $1.00                                     $0.06
Fourth Quarter                                           $0.1                                    $0.001
</TABLE>

                                       6
<PAGE>
<TABLE>
<CAPTION>
<S>                                                      <C>                                       <C>



            PERIOD                                       HIGH                                       LOW
2007
--------------------------------
First Quarter                                            $0.02                                     $0.01
Second Quarter                                           $0.02                                     $0.01
Third Quarter                                            $0.02                                     $0.01
Fourth Quarter                                           $0.01                                     $0.01
</TABLE>


Holders of Common Stock
As of December 31, 2008, we had approximately 652 stockholders of record of the
1,716,678 shares of common stock outstanding.


Dividends

We have never paid dividends on our Common Stock. We intend to follow a policy
of retaining earnings, if any, to finance the growth of the business and do not
anticipate paying any cash dividends in the foreseeable future. The declaration
and payment of future dividends on the Common Stock will be at the sole
discretion of the Board of Directors and will depend on our profitability and
financial condition, capital requirements, statutory and contractual
restrictions, future prospects and other factors deemed relevant.


Equity Compensation Plan Information

On December 27, 2002, we adopted a Stock Plan that allowed for 10,000,000 shares
of common stock to be issued for stock awards or pursuant to the exercise of
stock options. The purpose of the plan was to compensate officers, directors,
employees, consultants, and certain other persons providing bona fide services
to American Water Star or to compensate officers, directors, and employees for
accrual of salary through the award of the our common stock. The authority to
determine and oversee the administration of the plan was the Board of Directors.
On March 1, 2004, we amended the Stock Plan which increased the allowance of
10,000,000 shares to 30,000,000 million shares.
<TABLE>
<CAPTION>
<S>                                                 <C>               <C>                      <C>
-------------------------------  --------------------  --------------------  -------------------
                                                                              Number of shares
                                                                                  remaining
                                        Number                                  available for
                                   of shares to be                             future issuance
                                     issued upon        Weighted-average        under equity
                                     exercise of        exercise price of     compensation plans
                                     outstanding           outstanding        (excluding shares
                                  options, warrants     options, warrants       reflected in
                                      and rights            and rights           column (a))
Plan Category                            (a)                   (b)                   (c)
-------------------------------  --------------------  --------------------  -------------------

Equity compensation plans
 approved by stockholders                           0                 $0.00                    0

Equity compensation plans not
 approved by stockholders                 600,000 (1)                 $0.77           12,111,140
-------------------------------  --------------------  --------------------  -------------------

Total                                         600,000                 $0.77           12,111,140
-------------------------------  ====================  ====================  ===================
</TABLE>

                                       7
<PAGE>

     (1) The directors as of August 17, 2004 all received options of 120,000
shares at an exercise price of $0.77.



Sales of Unregistered Securities

On November 11, 2005, we authorized the issuance of 40,000 shares of our common
stock pursuant to a subscription agreement and received $10,000. As of the date
of this filing, the shares have not been issued.

On December 31, 2005, we authorized the issuance of 33,333,333, shares of common
stock to the Roger Mohlman Nevada Trust as conversion for notes payable to our
CEO, Roger Mohlman. On January 1, 2006, the shares were issued.


Subsequent Issuances
--------------------


On January 23, 2006, we issued 6,000,000 shares of common stock to Redwood
Consultants, LLC for services performed.

We believe that the issuance of the shares described above were exempt from
registration and prospectus delivery requirements of the Securities Act of 1933
by virtue of Section 4(2). The shares were issued directly by us and did not
involve a public offering or general solicitation. The recipients of the shares
were afforded an opportunity for effective access to our files and records that
contained the relevant information needed to make their investment decision,
including our financial statements and 34 Act reports. We reasonably believed
that the recipients, immediately prior to granting the shares, had such
knowledge and experience in our financial and business matters that they were
capable of evaluating the merits and risks of their investment. The recipients
had the opportunity to speak with our management on several occasions prior to
their investment decision.


                                       8
<PAGE>


ITEM 6.           SELECTED FINANCIAL DATA

We are a smaller reporting company as defined by Rule 12b-2 of the Securities
Exchange Act of 1934 and are not required to provide the information under this
item.

ITEM 7            MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATION

Forward Looking Statements

Our Management's Discussion and Analysis contains not only statements that are
historical facts, but also statements that are forward-looking (within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934). Forward-looking statements are, by their very
nature, uncertain and risky. These risks and uncertainties include
international, national and local general economic and market conditions;
demographic changes; our ability to sustain, manage, or forecast growth; our
ability to successfully make and integrate acquisitions; raw material costs and
availability; new product development and introduction; existing government
regulations and changes in, or the failure to comply with, government
regulations; adverse publicity; competition; the loss of significant customers
or suppliers; fluctuations and difficulty in forecasting operating results;
changes in business strategy or development plans; business disruptions; the
ability to attract and retain qualified personnel; the ability to protect
technology; and other risks that might be detailed from time to time in our
filings with the Securities and Exchange Commission.

Although the forward-looking statements in this report reflect the good faith
judgment of our management, such statements can only be based on facts and
factors currently known by them. Consequently, and because forward-looking
statements are inherently subject to risks and uncertainties, the actual results
and outcomes may differ materially from the results and outcomes discussed in
the forward-looking statements. You are urged to carefully review and consider
the various disclosures made by us in this report and in our other reports as we
attempt to advise interested parties of the risks and factors that may affect
our business, financial condition, and results of operations and prospects.

Summary of Business

Prime Star Group, Inc. (fka American Water Star) was started as a company which
developed, marketed, sold, and distributed bottled water with four branded
beverages: Hawaiian Tropic, Geyser Fruit, Geyser Sport, and Geyser Fruta. The
products were orientated to the health conscious consumer looking for an
alternative to products containing high sugar and caffeine levels. Our customers
included single and multi-store retail operations, governmental agencies, and
distributors who in turn sell to retail stores, convenience stores, schools and
other outlets. In addition, we branched into the private label and co-packing
industries in the fourth quarter of 2004.

We initially sold our products exclusively through distributors who then
supplied our products to retailers. Although we continued to use distributors,
we also expanded our sales effort through sales directly to retailers. As of
December 31, 2005, we sold through distributors and directly to customers.

We had hoped the private label and co-packaging of beverages for other
corporations would allows us to avoid costly marketing expenses that would
otherwise be associated with brand development, launch, and continuing
promotions.

During the third quarter of 2005, we entered into a "Forbearance Agreement" with
Laurus Master Fund ("Laurus") as a result of having previously defaulted on our
initial agreements with Laurus dated as of October 2004. Pursuant to the
Forbearance Agreement, Laurus agreed to forbear taking action on our existing
defaults until October 26, 2007, provided that we did not default under the new
Forbearance Agreement. In consideration for the Forbearance Agreement, we issued
a Secured Convertible Term Note in the principal amount of $1,286,098.61, which
represented the aggregate accrued interest and fees owed to Laurus as of July
31, 2005.

                                       9
<PAGE>

On September 15, 2005, Laurus notified us that certain Events of Default had
occurred under the second note and demanded payment of approximately $207,458 by
September 21, 2005.

Although our operations continued through the third quarter of 2005, the impact
of the Laurus debt which was in default by the end of the third quarter was
having a negative impact on our ability to continue operations as previously
planned. Most of our operations had completely ceased by the fourth quarter of
2005.

On November 4, 2005, Laurus again notified us that certain defaults had occurred
in the Securities Purchase Agreement, including our failure to make interest
payments on September 1, 2005, October 1, 2005 and November 1, 2005. In
addition, we had failed to make principal and interest payments due to Laurus on
August 1, 2005, September 1, 2005, October 1, 2005 and November 1, 2005. Based
upon the occurrence and continuance of these defaults, Laurus notified us that
they had accelerated the amounts due under the obligations, demanding payment in
full on November 7, 2005 in the amount of $6,694,875. In the event the payment
amount was not received by Laurus, foreclosure proceedings covered by the Deed
of Trust would begin.

Subsequent to November 7, 2005, foreclosure proceedings were begun on all of our
real, personal, tangible, and intangible property, including all buildings,
structures, leases, fixtures, and moveable personal property.

SUBSEQUENT EVENTS

On March 2, 2006, all of the real property was sold through a foreclosure sale,
and on March 23, 2006, all personal property was sold through a UCC sale.
Pursuant to the Order of the Court, on or about April 3, 2006, the Superior
Court of the State of Arizona in and for the County of Maricopa approved an
order (i) Approving Receiver's Final Report; (ii) Discharging Receiver; and
(iii) Dismissing Case. Further, the Order of the Court stated as follows: "On
March 2, 2006, all of the real property of the Receivership Property was sold
through a foreclosure sale ("Real Property Sale"). Laurus purchased the real
property sold at the Real Property Sale." "On March 23, 2006, all of the
personal property of the Receivership Property was sold through a UCC sale
("Personal Property Sale"). Laurus purchased the personal property sold at the
Personal Property Sale." "Following the Real Property Sale and the Personal
Property Sale, substantially all of the Company's assets have been sold to
Laurus." The loss of the assets included the loss of the ownership of five of
our subsidiaries; All Star Beverage, Inc., All Star Beverages Arizona, Inc., All
Star Beverages Jax, Inc., All Star Beverages Mississippi, Inc., and Hawaiian
Tropicals, Inc. Substantially all of our assets were sold, which had a
significant negative impact on our Results of Operations.


Critical Accounting Policies

Our financial statements are prepared in accordance with accounting principles
generally accepted in the United States., which require us to make estimates and
assumptions in certain circumstances that affect amounts reported. In preparing
these financial statements, management has made its best estimates and judgments
of certain amounts, giving due consideration to materiality. We believe that of
our significant accounting policies (more fully described in notes to the
financial statements), the following are particularly important to the portrayal
of our results of operations and financial position and may require the
application of a higher level of judgment by our management, and as a result are
subject to an inherent degree of uncertainty.


Estimates

Our discussion and analysis of our financial condition and results of operations
are based on our financial statements, which have been prepared in accordance
with accounting principles generally accepted in the United States. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. By their nature, these estimates and judgments are subject to
an inherent degree of uncertainty. We review our estimates on an on-going basis,
including those related to sales allowances, the allowance for doubtful
accounts, inventories and related reserves, long-lived assets, income taxes,
litigation and stock-based compensation. We base our estimates on our historical
experience, knowledge of current conditions and our beliefs of what could occur
in the future considering available information. Actual results may differ from
these estimates, and material effects on our operating results and financial
position may result. We believe the following critical accounting policies
involve our more significant judgments and estimates used in the preparation of
our financial statements.

                                       10
<PAGE>

Revenue Recognition

Revenue is recognized when products are delivered to the customer which occurs
when goods are shipped and title and risk of loss transfer to the customer, in
accordance with the terms specified in the arrangement with the customer.
Revenue recognition is deferred in all instances where the earnings process is
incomplete based on the criteria listed above. As of December 31, 2008 and 2007,
we did not have any revenues that were required to be deferred. Management
provides for sales returns and allowances in the same period as the related
revenues are recognized. Management bases their estimates on historical
experience or the specific identification of an event necessitating a reserve.

In accordance with Emerging Issue Task Force ("EITF") No. 01-9, "Accounting for
Consideration Given by a Vendor to a Customer," slotting fees, buy downs,
cooperative advertising and other reductions and incentives given by us to our
customers are included as a reduction of revenue, rather than as a cost of goods
sold.

Slotting fees paid to a customer are generally amortized over the life of the
slotting agreement which is typically one year and included as reduction of
revenues.

Stock-Based Compensation

We account for stock-based compensation in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 123R, "Share-Based Payment." SFAS
123R requires that we account for all stock-based compensation transactions
using a fair-value method and recognize the fair value of each award as an
expense, generally over the service period. The fair value of stock options is
based upon the market price of our common stock at the grant date. We estimate
the fair value of stock option awards, as of the grant date, using the
Black-Scholes option-pricing model. The use of the Black-Scholes model requires
that we make a number of estimates, including the expected option term, the
expected volatility in the price of our common stock, the risk-free rate of
interest and the dividend yield on our common stock. If our expected option term
and stock-price volatility assumptions were different, the resulting
determination of the fair value of stock option awards could be materially
different and our results of operations could be materially impacted.


                                       11
<PAGE>



Accounting for Non-Employee Stock-Based Compensation

We measure compensation expense for non-employee stock-based compensation in
accordance with EITF No. 96-18, "Accounting for Equity Instruments that are
Issued to Other Than Employees for Acquiring, or in Conjunction with Selling,
Goods or Services." The fair value of the option issued or expected to be issued
is used to measure the transaction, as this is more reliable than the fair value
of the services received. The fair value is measured at the value of our common
stock on the date that the commitment for performance by the counterparty has
been reached or the counterparty's performance is complete. In the case of the
issuance of stock options, we determine the fair value using the Black-Scholes
option pricing model. The fair value of the equity instrument is charged
directly to stock-based compensation expense and credited to additional paid-in
capital.

Modifications to Convertible Debt

We account for modifications of embedded conversion features ("ECF") in
accordance with EITF 06-6 "Debtors Accounting for a Modification (or exchange)
of Convertible Debt Instruments." EITF 06-6 requires the modification of a
convertible debt instrument that changes the fair value of an ECF be recorded as
a debt discount and amortized to interest expense over the remaining life of the
debt. If modification is considered a substantial (i.e., greater than 10% of the
carrying value of the debt), an extinguishment of the debt is deemed to have
occurred, resulting in the recognition of an extinguishment gain or loss.

Derivative Financial Instruments

Derivative financial instruments, as defined in SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," consist of financial instruments
or other contracts that contain a notional amount and one or more underlying
(e.g., interest rate, security price or other variable), that require no initial
net investment and permit net settlement. Derivative financial instruments may
be free-standing or embedded in other financial instruments. Further, derivative
financial instruments are initially, and subsequently, measured at fair value
and recorded as liabilities or, in rare instances, assets.

We do not use derivative financial instruments to hedge exposures to cash-flow,
market or foreign-currency risks. However, we have convertible debt with
features that are either (i) not afforded equity classification, (ii) embody
risks not clearly and closely related to host contracts, or (iii) may be
net-cash settled by the counterparty. As required by SFAS 133, in certain
instances, these instruments are required to be carried as derivative
liabilities, at fair value, in its financial statements.

We estimate the fair values of our derivative financial instruments using the
Black-Scholes option valuation model because it embodies all of the requisite
assumptions (including trading volatility, estimated terms and risk free rates)
necessary to fair value these instruments. Estimating fair values of derivative
financial instruments requires the development of significant and subjective
estimates that may, and are likely to, change over the duration of the
instrument with related changes in internal and external market factors. In
addition, option-based techniques are highly volatile and sensitive to changes
in the trading market price of our common stock, which has a high-historical
volatility. Since derivative financial instruments are initially and
subsequently carried at fair values, our operating results will reflect the
volatility in these estimate and assumption changes.



                                       12
<PAGE>



Equity Instruments Issued with Registration Rights Agreement

We account for these penalties as contingent liabilities, applying the
accounting guidance of SFAS No. 5, "Accounting for Contingencies" as required by
FASB Staff Positions FSP EITF 00-19-2 "Accounting for Registration Payment
Arrangements," which was issued December 21, 2006. Accordingly, we recognize the
damages when it becomes probable that they will be incurred and amounts are
reasonably estimable.

Recent Accounting Pronouncements

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities -- Including an amendment of FASB
Statement No. 115," ("SFAS No. 159"). This standard permits, but does not
require, all entities to choose to measure eligible items at fair value at
specified election dates. For items for which the fair value option has been
elected, an entity would report unrealized gains and losses in earnings at each
subsequent reporting date. SFAS No. 159 is effective as of the beginning of an
entity's first fiscal year beginning after November 15, 2007. We adopted the
standard as of January 1, 2008 but did not have any of its eligible financial
assets and liabilities under the guidance of this standard.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business
Combinations," or ("SFAS No. 141(R)"). SFAS 141(R) expands the definitions of a
business and a business combination and requires that: the purchase price of an
acquisition, including the issuance of equity securities to be determined on the
acquisition date, be recorded at fair value at the acquisition date; all assets,
liabilities, contingent consideration, contingencies and in-process research and
development costs of an acquired business be recorded at fair value at the
acquisition date; acquisition costs generally be expensed as incurred;
restructuring costs generally be expensed in periods subsequent to the
acquisition date; and changes be made in accounting for deferred tax asset
valuation allowances and acquired income tax uncertainties after the measurement
period to impact income tax expense. Upon the Company's adoption of SFAS 141(R),
any subsequent changes to the Company's acquired uncertain tax positions and
valuation allowances associated with acquired deferred tax assets will no longer
be applied to goodwill, regardless of acquisition date of the associated
business combination. Rather, those changes will typically be recognized as an
adjustment to income tax expense. SFAS No. 141(R) applies prospectively to
business combinations for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after December
15, 2008. The adoption of this statement to have a significant impact on its
current financial statements, although it is likely to have a significant effect
on reporting of any acquisitions completed after January 1, 2009.

In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in
Consolidated Financial Statements - an amendment of ARB No. 51," ("SFAS No.
160"). SFAS No. 160 amends ARB No. 51 to establish accounting and reporting
standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. An ownership interest in subsidiaries held by
parties other than the parent should be presented in the consolidated statement
of financial position within equity, but separate from the parent's equity. SFAS
No. 160 requires that changes in a parent's ownership interest while the parent
retains its controlling financial interest in its subsidiary should be accounted
for similarly to equity transactions. When a subsidiary is deconsolidated, any
retained noncontrolling equity investment should be initially measured at fair
value, with any gain or loss recognized in earnings. SFAS No. 160 requires
consolidated net income to include the amounts attributable to both the parent
and the noncontrolling interest. It also requires disclosure, on the face of the
consolidated statement of income, of the amounts of consolidated net income
attributable to the parent and to the noncontrolling interests. SFAS No. 160 is
effective for fiscal years beginning on or after December 15, 2008, including
interim periods within those fiscal years. We do not expect SFAS No. 160 will
have a material impact on our financial statements.


                                       13
<PAGE>



In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
Instruments and Hedging Activities, an amendment of SFAS No. 133". SFAS No. 161
amends and expands the disclosure requirements of SFAS No. 133 for derivative
instruments and hedging activities. SFAS No. 161 requires qualitative disclosure
about objectives and strategies for using derivative and hedging instruments,
quantitative disclosures about fair value amounts of the instruments and gains
and losses on such instruments, as well as disclosures about credit-risk
features in derivative agreements. We do not expect the adoption of SFAS No. 161
to have a significant impact on our consolidated financial statements.

In April 2008, the FASB issued FASB Staff Position FSP No. 142-3, "Determination
of the Useful Life of Intangible Assets" ("FSP 142-3"). FSP 142-3 amends the
factors that should be considered in developing renewal or extension assumptions
used to determine the useful life of a recognized intangible asset under SFAS
No. 142. FSP 142-3 is effective for us in the fiscal year beginning September
30, 2009. We do not expect the impact of the adoption of FSP 142-3 to impact on
our consolidated financial statements.

In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles." SFAS No. 162 identifies the sources of accounting
principles and the framework for selecting the principles to be used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (the GAAP
hierarchy). SFAS will become effective 60 days following the Securities and
Exchange Commission's approval of the Public Company Accounting Oversight Board
amendments to AU Section 411, "The Meaning of Present Fairly in Conformity with
Generally Accepted Accounting Principles." We do not expect the adoption of SFAS
No. 162 to have a significant impact on our consolidated financial statements.

Results of Operations for the Fiscal Year Ended December 31, 2008 and 2007

Sales

We had no revenues for the year ended December 31, 2008. For the year ended
December 31, 2007 we had no revenues. For the year ended December 31, 2008 our
general and administrative expenses totaled $617,826 a decrease of $108,174 from
the $726,000 for the year ended December 31, 2007.


Liquidity and Capital Resources

As of December 31, 2008, the company had no cash and a deficit in working
capital of $8,949,402 compared to no cash and a deficit in working capital of
$8,354,076 as of December 31, 2007.

Cash used in operating activities totaled $377,826 for the year-ended December
31, 2008. The 2008 amounts represent on the loss of $617,826 which was partially
offset by an increase in accounts payable and accrued expenses of $240,000.

Cash flows from financing activities totaled $377,826 for the year ended
December 31, 2008 compared to $243,000 for the year ended December 31, 2007. The
$377,826 for 2008 consisted entirely of advances from related parties. The 2007
amount consisted of a $243,000 advance from a related party.


There were no investing activities in either period. Although the company has
no cash and a deficit in working capital it believes that it will be able to
raise funds for its operations or find a company to acquire with its stock or
with which to merge.


                                       14
<PAGE>


Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors.
impacted by lower net selling prices were attributable to sales to a membership
warehouse retailer and distributors and $125,000 in inventory reserves resulting
from expiring product. During the 2007 period, a higher portion of sales were to
retailers.

Selling and Marketing Expenses

We did not have any selling and marketing expenses in 2008 or 2007.

General and Administrative Expenses

General and administrative expenses include personnel costs for management,
operations and finance functions, along with legal and accounting costs, bad
debt expense, insurance and non-cash, stock-based compensation.

General and administrative expenses increased to $377,826 during the 2008 period
from $243,000 in same period in 2007. The change from the 2008 period was
attributable to professional fees in the 2008 period.



                                       15
<PAGE>



Cash Flows

The following table sets forth our cash flows for the year ended December 31:
<TABLE>
<CAPTION>
<S>                               <C>              <C>              <C>
                                       2008             2007            Change
                                  ---------------- ---------------- ----------------

  Discontinued activities         $      (617,826) $      (726,000) $       108,174

  Adjustments to reconcile net
  Loss to net cash used in
  Operating activities                     22,500                -          (22,500)

  Financing activities                          -          243,000         (243,000)
                                  ---------------- ---------------- ----------------

  Change                          $      (595,326) $      (483,000) $     (112,326)
                                  ================ ================ ================
</TABLE>

Operating Activities

Operating cash flows for the 2008 period reflects our net loss of $617,826.
Operating cash flows during 2007 reflect our net loss of $726,000.

Investing Activities

We had no investing activities in 2007 or 2008.

Financing Activities

We had no financing activities in 2007 or 2008.


                                       16
<PAGE>



Off Balance Sheet Arrangements

We have no off balance sheet arrangements.

ITEM 7A   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities
Exchange Act of 1934 and are not required to provide the information under this
item.



ITEM 8.  FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S>                                                                                                              <C>

                                                                                                          Page No.
                                                                                                          ----------
Audited Financial Statements for PSGI

Report of Independent Registered Public Accounting Firm                                                          19
-------------------------------------------------------

Balance Sheets as of December 31, 2008 and 2007                                                                  20
-----------------------------------------------

Statements of Operations for the Years Ended December 31, 2008 and 2007                                          21
-----------------------------------------------------------------------

Statements of Shareholders' Equity for the Years Ended December 31, 2008 and 2007                                22
---------------------------------------------------------------------------------

Statements of Cash Flows for the Years Ended December 31, 2008 and 2007                                          23
-----------------------------------------------------------------------

Notes to Financial Statements                                                                                    24
-----------------------------
</TABLE>


                                       17
<PAGE>



             Report of Independent Registered Public Accounting Firm

To The Board of Directors and Stockholders of
Prime Star Group, Inc.

We have audited the accompanying consolidated balance sheets of Prime Star
Group, Inc. and subsidiaries as of December 31, 2008 and 2007, and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows from operations for each of the years then ended. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform an audit of the Company's internal control
over its financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Prime
Star Group, Inc. as of December 31, 2008 and 2007, and the results of its
consolidated operations and cash flows from operations for each of the years
then ended in conformity with accounting principles generally accepted in the
United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note 2 to the
consolidated financial statements conditions exist which raise substantial doubt
about the Company's ability to continue as a going concern unless it is able to
generate sufficient cash flows to meet its obligations and sustain its
operations. Those conditions raise substantial doubt about its ability to
continue as a going concern. Management's plans regarding those matters are also
described in Note 2. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

/s/

Gruber & Company, LLC
Lake Saint Louis, Missouri

March 30, 2009



                                       18
<PAGE>

<TABLE>
<CAPTION>
<S>                                                                                <C>              <C>




                             PRIME STAR GROUP, INC.
                                  BALANCE SHEET

                                                                                            December 31,
                                                                                   -------------------------------
                                                                                        2008            2007
                                                                                   --------------- ---------------

Assets
   Current assets:
     Cash and cash equivalents                                                     $           --  $           --

     Inventories                                                                          339,722              --

                                                                                   --------------- ---------------
        Total current assets                                                              339,722              --

   Equipment, net of accumulated depreciation                                           1,133,846              --
                                                                                   --------------- ---------------
        Total assets                                                               $    1,473,568  $           --
                                                                                   =============== ===============

Liabilities and Shareholders' Deficit
   Current liabilities:
     Accounts payable                                                              $    4,229,565  $    3,874,239
     Accrued liabilities                                                                   45,000          45,000
     Accrued compensation - chairman and majority stockholder                             856,015         616,015



     Advances from related parties                                                      3,818,822       3,818,822
                                                                                   --------------- ---------------
        Total current liabilities                                                       8,949,402       8,354,076
                                                                                   --------------- ---------------


Shareholders' deficit
   Preferred stock, $0.0001 par value, 25,000,000 shares
       authorized, no shares issued.                                                           --              --
   Common stock, $0.0001 par value, 125,000,000 shares
       Authorized, 1,368,529 and 1,368,529 shares issued and outstanding
       As of 12/31/2008 and 12/31/2007
                                                                                              137             137
   Series A preferred convertible, 4,100,000 shares
       authorized, no shares issued

                                                                                               --              --
   Stock bought (or for) services not issued 720,000 and 720,000
       shares at 12/31/2008 and 12/31/2007                                                     72              72
   Additional paid-in capital                                                          39,265,196      37,769,128
    Common stock subscribed                                                                10,000          10,000
                                                                                   --------------- ---------------
   Accumulated (deficit)                                                              (46,751,239)    (46,133,413)
                                                                                   --------------- ---------------
Total stockholders' deficit                                                            (7,475,834)     (8,354,076)
                                                                                   --------------- ---------------
Total liabilities and stockholders' equity                                         $    1,473,568  $
                                                                                   =============== ===============

See accompanying Notes to Financial Statements.
</TABLE>

                                       19
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                                <C>


                             PRIME STAR GROUP, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                                      Year Ended December 31,
                                                                                   -------------------------------
                                                                                        2008            2007
                                                                                   ---------------  --------------

Sales                                                                              $                $
Cost of sales                                                                                  --              --
                                                                                   ---------------  --------------
   Gross profit (loss)                                                                         --              --
                                                                                   ---------------  --------------

Expenses:
   Depreciation and amortization                                                               --              --
   General and administrative expenses-related party                                      377,826         243,000
   Loss on disposal or discontinued operations                                            240,000         483,000
                                                                                   ---------------  --------------
     Total cost and expenses                                                              617,826         726,000
                                                                                   ---------------  --------------
Net operating (loss)                                                                     (617,826)       (726,000)

Other (expense)
         Interest                                                                              --              --
         Interest (expense) related party                                                      --              --
                                                                                     -------------   -------------
Net Loss                                                                           $     (617,826)  $    (726,000)
                                                                                   ===============  ==============

Loss per share from continuing operations                                                      --              --

Loss per share from discontinued operations                                                ($0.45)         ($0.53)
                                                                                   ---------------   -------------
Total loss per share                                                                       ($0.45)         ($0.53)
                                                                                   ---------------   -------------


Weighted average number of common shares outstanding-
    basic and fully diluted                                                             1,368,529       1,368,529
                                                                                   ===============  ==============
</TABLE>

See accompanying Notes to Financial Statements.

                                       20
<PAGE>



                             PRIME STAR GROUP, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
<S>                         <C>        <C>    <C>         <C>                   <C>         <C>         <C>           <C>

                                                                       Stock
                                                          Unamortized  Earned
                                                           Cost of       for
                                              Additional    shares     Services   Stock       Common                     Total
                                                Paid-in      issued      not     Issuance      Stock    Accumulated   Stockholders'
                              Shares   Amount   Capital   For service   Issued   Obligation  Subscribed    Deficit       Equity

Balance at December 31,
 2006                       $1,368,529 $  137 $37,769,128 $           $      72 $        -- $    10,000 $(45,407,413) $  (7,628,076)







Net loss for year
Ended December 31, 2007             --     --          --          --        --          --          --     (726,000)      (726,000)
                            --------------------------------------------------------------------------------------------------------
Balance at December 31,
 2007                        1,368,529    137  37,769,128          --        72          --      10,000  (46,133,413)    (8,354,076)
Capital contribution
     Property and equipment         --     --   1,133,846          --        --          --          --           --      1,133,846
     Inventory                      --     --     339,722          --        --          --          --           --        339,722
     Paid for professional
      services                      --     --      22,500          --        --          --          --           --         22,500






  Net loss for the year
   ended December 31, 2008          --     --          --          --        --          --          --     (617,826)    (2,644,172)
                            -------------------------------------------------------------------------------------------------------
BALANCE                      1,368,529 $  137   19,870,781 $    19,871 $      72 $        -- $    10,000 $(46,751,239)  $(4,672,350)
                            =======================================================================================================
</TABLE>



See accompanying Notes to Financial Statements.

                                       21
<PAGE>


                             PRIME STAR GROUP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
<S>                                                                                                            <C>        <C>

                                                                                                                For the year ended
                                                                                                                   December 31,
                                                                                                               ---------------------
                                                                                                                  2008       2007
                                                                                                               ---------- ----------

Cash flows from operating activities:
Net loss from discontinued operations                                                                          $(617,826) $(726,000)
 Adjustments to reconcile net loss to net cash used
  in operating activities
   Professional services contributed by shareholders                                                               22,500         --
 Changes in operating assets and liabilities
   Accounts payable and accrued expenses                                                                          595,326    483,000
                                                                                                                ---------  ---------

Net cash used in operating activities                                                                                  --  (243,000)

Cash flows from financing activities
 Advances from related parties                                                                                         --    243,000
                                                                                                                ---------  ---------
Net cash provided from financing activities                                                                            --    243,000
                                                                                                                ---------  ---------

Net increase (decrease) in cash                                                                                        --         --
Cash - beginning                                                                                                       --         --
                                                                                                                ---------  ---------
Cash - ending                                                                                                  $       -- $       --
                                                                                                                =========  =========

Supplemental disclosures:
 Interest paid                                                                                                 $       -- $       --
                                                                                                                =========  =========
 Income taxes paid                                                                                             $       -- $       --
                                                                                                                =========  =========

Supplemental schedule of noncash investing and financing activities:

Equipment contributed as additional capital contributions                                                      $1,133,846 $       --
Inventory contributed as additional capital contributions                                                         339,722         --
</TABLE>



See accompanying Notes to Financial Statements.

                                       22
<PAGE>




                   Prime Star Group, Inc. and Its Subsidiaries
                 Notes to the Consolidated Financial Statements
                             As of December 31, 2008

1.        Significant Accounting Policies
          -------------------------------

Nature of Business

The Company was originally organized on June 1, 1999 as American Career
Centers, Inc. On April 2, 2002 we amended our Articles of Incorporation to
change our name to American Water Star, Inc. On April 11, 2008, the Company
filed a Certificate of Amendment to Articles of Incorporation with the Nevada
Secretary of State. The Amendment changed the Company's name to Prime Star
Group, Inc.; reverse split the shares of the Company on a 1 for 100 basis,
reauthorized the par value to $.0001 per share and increased the number of
authorized shares to 125,000,000 common and 25,000,000 preferred shares.

Use of Estimates

The preparation of our consolidated financial statements requires us to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses, and the disclosures of contingent assets and
liabilities in our consolidated financial statements and accompanying notes.
Although these estimates are based on our knowledge of current events and
actions we may undertake in the future, actual results may ultimately differ
from estimates and assumptions.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of
American Water Star, Inc. a Nevada corporation and its wholly owned subsidiaries
and are prepared in accordance with accounting principles generally accepted in
the United States. The accompanying financial statements reflect the results of
operations and financial condition of the following:

         C.R.D. of Nevada, Inc.
         Geyser Beverages, Inc.
         New Age Packaging, Inc.
         Delta Distributors, Inc.
         Hawaiian Tropicals, Inc.
         Sunset Bottling, Inc.
         Island Beverage, Inc.
         Excalibur Sales, Inc.
         Excalibur Sales USA, Inc.
         Excalibur Trucking, Inc.
         All-Star Beverages, Inc.
         American Beverages and Distributing, Inc.
         All-Star Beverages JAX, Inc.
         Geyser Products, Inc.
         N200FM, Inc.
         Valley Lending, Inc.
         Geyser, Inc.
         Sol La Playa, Inc.
         Jos La Vista Bonita Inc.
         All-Star Beverages Mississippi, Inc.

                                       23
<PAGE>

                   Prime Star Group, Inc. and Its Subsidiaries
                 Notes to the Consolidated Financial Statements
                             As of December 31, 2008

         All-Star Beverages Arizona, Inc.
         Marine Leasing, Inc.
         AIM-USA, Inc.
         The Healthchannel.com, Inc.
         Global Fine Wine & Spirits, Inc.


Risks and Uncertainties

The Company's operations could be adversely affected by restrictions on sources
of supply; advertising effectiveness; changes in labeling requirements; changes
in governmental regulations; changes in the rate of taxation; the expropriation
of private enterprise; or product issues such as a product recall. The foregoing
list of risks and uncertainties is not exclusive. We monitor our operations with
a view to minimizing the impact to our overall business that could arise as a
result of the risks inherent in our business.

Loss per Share

Net loss per share is provided in accordance with Statement of Financial
Accounting Standards No. 128 (SFAS #128) "Earnings Per Share". Basis loss per
share is computed by dividing losses available to common stockholders by the
weighted average number of common shares outstanding during the period. There
were no securities considered to be dilutive in the computation of loss per
share. All earnings per share data has been recomputed based on the 1 for 100
split on April 11, 2008.

Trade Accounts Receivable

We record trade accounts receivable at net realizable value. This value includes
an appropriate allowance for estimated uncollectible accounts to reflect any
loss anticipated on the trade accounts receivable balances and charged to the
provision for doubtful accounts. We calculate the allowance based on our history
of write-offs, level of past due accounts based on the contractual terms of the
receivables and our relationships with and economic status of our customers.

Inventories

Inventories consist primarily of packaging supplies, and are valued at the lower
of cost or market. We determine cost on the basis of average cost or first-in,
first-out methods.

During the year ended December 31, 2008 the Company's Chief Executive Officer
and major shareholder contributed packaging inventory with a cost of $339,722.
The Company determined that the original cost approximated fair market value
upon the date of contribution.

Stock Based Compensation

Common stock, warrants and options issued for services by non-employees is
accounted for based on the fair market value at the date the services are
performed. If the services are to be performed over a period of time the value
is amortized over the life of the period that services are performed.

                                       24
<PAGE>



                   Prime Star Group, Inc. and Its Subsidiaries
                 Notes to the Consolidated Financial Statements
                             As of December 31, 2008


We account for our stock option plan in accordance with the provisions of SFAS
No. 123, "Accounting for Stock Based Compensation." SFAS No. 123 permits
entities to recognize as expense over the vesting period the fair value of all
stock-based awards on the date of the grant.

Income Taxes

We account for income taxes under SFAS 109, "Accounting for Income Taxes". The
asset and liability approach requires the recognition of deferred tax
liabilities and assets for the expected future tax consequences of temporary
differences between the carrying amounts and the tax basis of assets and
liabilities. The provision for income taxes differ from the amounts currently
payable because of temporary differences in the recognition of certain income
and expense items for financial reporting and tax reporting purposes.

Fair Value of Financial Instruments

The carrying value of current assets and liabilities reasonably approximates
their fair value due to their short maturity periods. The carrying value of our
debt obligations reasonably approximates there fair value at the stated interest
rate approximates current market interest rates of debt with similar terms that
is available to us.

Cash and Cash Equivalents

Cash and cash equivalents include cash in banks and certificates of deposit that
mature within three months of the date of purchase.

Property, Plant and Equipment

We state property, plant and equipment at cost and depreciate such assets
principally by the straight-line method over the estimated useful lives of the
assets. Management assesses the recoverability of the carrying amount of
property, plant and equipment if certain events or changes occur, such as a
significant decrease in market value of the assets or a significant change in
the business conditions in a particular market. The estimated useful lives of
the assets or the lease term based on the following life expectancy:

-------------------------------------------------------------------------
                                                                    Life
Computer equipment                                                     5
Software                                                               3
Office furniture and fixtures                                          7
Bottling equipment                                                 7 -10
Leasehold improvements                                     Life of lease
Buildings                                                             30


                                       25
<PAGE>


                   Prime Star Group, Inc. and Its Subsidiaries
                 Notes to the Consolidated Financial Statements
                             As of December 31, 2008

Depreciation commences upon implementation of the asset. Repairs and maintenance
expenditures are charged to operations as incurred. Major improvements and
replacements which extend the useful life of an asset, are capitalized and
depreciated over the remaining estimated useful life of the asset. When assets
are retired or sold, the costs and accumulated depreciation and amortization are
eliminated and any resulting gain or loss is reflected in operations.

During the year ended December 31, 2008, the Company's Chief Executive Officer
and major shareholder contributed bottling equipment with a cost of $1,133,846.
The Company determined that the original cost approximated fair market value
upon the date of contribution. The bottling equipment was not placed into
service as of December 31, 2008, therefore no depreciation was provided for the
year ended December 31, 2008.

Derivative Financial Instruments

We account for derivative financial instruments in accordance with SFAS No.
133, "Accounting for Derivative  Instruments and Hedging Activities," as amended
by SFAS No. 137,  SFAS No. 138,  and SFAS No. 149.  Our Company  recognizes  all
derivative  instruments  as either  assets or  liabilities  at fair value in our
consolidated balance sheets.

Advertising Costs

The Company expenses all costs of advertising as incurred. There were $-0- and
$-0- advertising costs included in general and administrative expenses as of
December 31, 2008 and 2007.

Revenue Recognition

Revenue from the sale of our products is recorded when all of the following
criteria are met:

Persuasive evidence of an arrangement exists, delivery has occurred or services
have been rendered, 0ur price to the buyer is fixed and determinable, and
collectibility is reasonably assured.

Sales are recorded net of discounts, rebates and promotional costs.

Debt issue costs

Costs related to securing our long-term debt are recorded as an asset and are
amortized over the life of the debt.

Long-lived Assets

We review the carrying value of long-lived assets at each balance sheet date if
indication of impairment exists. Recoverability is assessed using undiscounted
cash flows based upon historical results and current projections of earnings
before interest and taxes. Impairment is measured using discounted cash flows of
future operating results based upon a rate that corresponds to the cost of
capital. Impairments are recognized in operating results to the extent that
carrying value exceeds discounted cash flows of future operations. At December
31, 2005, we recognized an impairment expense in the amount of $1,654,949.


                                       26
<PAGE>


                   Prime Star Group, Inc. and Its Subsidiaries
                 Notes to the Consolidated Financial Statements
                             As of December 31, 2008


Recently Issued Accounting Standards

In December 2007, the FASB issued SFAS 141 (revised 2007), Business
Combinations, ("SFAS 141R"). SFAS 141R establishes principles and requirements
for how an acquirer recognizes and measures in its financial statements the
identifiable assets acquired, including goodwill, the liabilities assumed and
any non-controlling interest in the acquiree. The Statement also establishes
disclosure requirements to enable users of the financial statements to evaluate
the nature and financial effects of the business combination. SFAS 141R is
effective for business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after
December 15, 2008. The impact of adopting SFAS 141R will be dependent on the
future business combinations that we may pursue after its effective date.

In December 2007, the SEC issued SAB 110 Share-Based Payment. SAB 110 amends and
replaces Question 6 of Section D.2 of Topic 14, "Share-Based Payment," of the
Staff Accounting Bulletin series. Question 6 of Section D.2 of Topic 14
expresses the views of the staff regarding the use of the "simplified" method in
developing an estimate of the expected term of "plain vanilla" share options and
allows usage of the "simplified" method for share option grants prior to
December 31, 2007. SAB 110 allows public companies which do not have
historically sufficient experience to provide a reasonable estimate to continue
use of the "simplified" method for estimating the expected term of "plain
vanilla" share option grants after December 31, 2007. SAB 110 is effective
January 1, 2008. We currently use the "simplified" method to estimate the
expected term for share option grants as we do not have enough historical
experience to provide a reasonable estimate. We will continue to use the
"simplified" method until we have enough historical experience to provide a
reasonable estimate of expected term in accordance with SAB 110. We do not
expect SAB 110 will have a material impact on our balance sheets, statements of
operations and cash flows.

We adopted Financial Accounting Standards Board (FASB) Statement of Financial
Accounting Standards (SFAS) No. 157, Fair Value Measurements, (SFAS 157) on
January 1, 2008, which became effective for fiscal periods beginning after
November 15, 2007. SFAS 157 defines fair value, establishes a framework for
using fair value to measure assets and liabilities, and expands disclosure about
fair value measurements. SFAS 157 applies whenever other statements require or
permit assets or liabilities to be measured at fair value. The adoption of SFAS
157 did not have an impact on our financial statements.

We adopted SFAS No. 159, The Fair Value Option for Financial Assets and
Financial Liabilities-Including an Amendment of FASB Statement No. 115 (SFAS No.
159) on January 1, 2008, which became effective for fiscal periods beginning
after November 15, 2007. This standard permits entities to choose to measure
many financial instruments and certain other items at fair value. While SFAS No.
159 became effective for our 2008 fiscal year, we did not elect the fair value
measurement option for any of our financial assets or liabilities.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133 (SFAS
161). This statement changes the disclosure requirements for derivative
instruments and hedging activities. SFAS 161 requires enhanced disclosures about
(a) how and why an entity uses derivative instruments, (b) how derivative
instruments and related hedged items are accounted for under SFAS 133 and its
related interpretations, and (c) how derivative instruments and related hedged
items affect an entity's financial position, financial performance, and cash
flows. SFAS 161 is effective as of the beginning of our 2009 fiscal year. We are
currently evaluating the potential impact, if any, of the adoption of SFAS 161
on our financial statements.


                                       27
<PAGE>


                   Prime Star Group, Inc. and Its Subsidiaries
                 Notes to the Consolidated Financial Statements
                             As of December 31, 2008

In April 2008, the FASB issued FASB Staff Position No. FAS 142-3, Determination
of the Useful Life of Intangible Assets (FSP 142-3). FSP 142-3 amends the
factors that should be considered in developing renewal or extension assumptions
that are used to determine the useful life of a recognized intangible asset
under FASB Statement No. 142, Goodwill and Other Intangible Assets and requires
enhanced related disclosures. FSP 142-3 must be applied prospectively to all
intangible assets acquired as of and subsequent to fiscal years beginning after
December 15, 2008. We are currently evaluating the impact that FSP 142-3 will
have on our financial statements.

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted
Accounting Principles (SFAS 162). SFAS 162 identifies the sources of accounting
principles to be used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with generally
accepted accounting principles (GAAP) in the United States (the GAAP hierarchy).
This Statement will be effective November 15, 2008. We currently adhere to the
hierarchy of GAAP as presented in SFAS 162 and do not expect its adoption will
have a material impact on its results of operations and financial condition.

We have considered all other recently issued accounting pronouncements and do
not believe the adoption of such pronouncements will have a material impact on
our consolidated financial statements.


Reclassifications

Certain reclassifications have been made to prior periods to conform to
current presentation.

2. Going Concern
   -------------

The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As shown in the financial
statements, during the years ended December 31, 2008 and 2007, the Company
incurred losses from operations of $617,826 and $726,000, respectively. In
addition, the Company has a deficit in working capital, and a deficit of
retained earnings, and a negative stockholders' equity. The financial statements
do not include any adjustments relating to the recoverability and classification
of liabilities that might be necessary should the Company be unable to continue
as a going concern.

3.  Accrued Compensation and Notes Payable to the Chairman / CEO

Loans payable to the Chairman / CEO consist primarily of cash advances and at
December 31, 2004 the advances totaled $1,635,000. Each loan was non-interest
bearing and was due on demand. The Company recorded accrued interest of $35,000
based upon a 6% interest rate. On November 18, 2005, the Company's Board of
Directors authorized the Chairman's / CEO's request to convert notes payable
totaling $1,700,000 into shares of the Company's common stock, thus reducing the
Company's liabilities by $1,700,000. The conversion was done on January 6, 2006
at $.05 per share based on the reported market price of the Company's common
shares on that date.

Accrued compensation totaled $ 856,015 and $ 616,015 at December 31, 2008 and
2007.

                                       28
<PAGE>


                   Prime Star Group, Inc. and Its Subsidiaries
                 Notes to the Consolidated Financial Statements
                             As of December 31, 2008


4.  Commitments and Contingencies

Legal proceedings

The Company is involved in various unresolved legal actions, administrative
proceedings and claims in the ordinary course of business. Although it is not
possible to predict with certainty the outcome of these unresolved actions, the
Company believes these unresolved legal actions will not have a material effect
on its financial position or results of operation.

Operating Leases

We have lease agreements and arrangements, whereby we lease warehouse and
operating facilities. Each lease expired on or before January 1, 2008. For the
year ended December 31, 2007 our rent expense was approximately $486,000.

5.  Income Taxes

Deferred income taxes are determined based on the tax effect of items subject to
differences in book and taxable income. The Company had no income tax provision
for the years ended December 31, 2008 and 2007. There is approximately
$46,000,000 of net operating loss carry-forward, which expires beginning in
2022. the net deferred tax is as follows:

<TABLE>
<CAPTION>
<S>                                                                                   <C>            <C>

                                                                                          For the Years Ended
                                                                                              December 31,
                                                                                           2008           2007
Non-current deferred tax assets (liabilities):

Net operating loss carry-forward                                                      $  14,500,000  $  14,052,000
Valuation allowance                                                                     (14,500,000)   (14,052,000)
                                                                                        ------------  -------------
                                                                                      $         ---  $         ---
                                                                                        ============  =============
</TABLE>

                                       29
<PAGE>



                   Prime Star Group, Inc. and Its Subsidiaries
                 Notes to the Consolidated Financial Statements
                             As of December 31, 2008


A reconciliation of the provision for income taxes to the statutory federal rate
(34%) for continuing operations is as follows:

<TABLE>
<CAPTION>
<S>                                                                                     <C>           <C>


                                                                                           For the Years Ended
                                                                                               December 31,
                                                                                                2008          2007
Statutory tax benefit                                                                   $   (258,400) $   (246,840)
Non-deductible expense                                                                            --       164,220
Valuation allowance                                                                          258,400        82,620
                                                                                          -----------  ------------
                                                                                        $ ----------  $ ----------
                                                                                          ===========  ============
</TABLE>


6.   Related Party Transactions
     --------------------------

During the year ended December 31, 2007 our Chairman, Chief Executive
Officer and largest  stockholder  of the Company has advanced  $4,812,663 to the
Company.

Entities controlled by the former wife of the Company's Chairman, Chief
Executive Officer and largest stockholder  provided the following to the Company
for the year ended December 31, 2008 and December 31, 2007, respectively:

Services:
<TABLE>
<CAPTION>
<S>                                                                                     <C>                <C>

                                                                                          For the       For the

                                                                                         Year Ended    Year Ended

                                                                                         December       December
                                                                                            31,             31,

                                                                                            2008          2007
                                                                                        ------------- -------------



Payments under operating and capital leases                                             $         --       486,000
</TABLE>

                                       30
<PAGE>



                   Prime Star Group, Inc. and Its Subsidiaries
                 Notes to the Consolidated Financial Statements
                             As of December 31, 2008


7.   Equity Transactions
     -------------------

During the first quarter 2005:
------------------------------

On February 28, 2005, the Company issued Laurus a warrant to purchase 1,500,000
shares of common stock with a purchase price of $0.50 pursuant to an Amendment
and Waiver Agreement for the purpose of amending the terms of the previous
Secured Convertible Term Note, the Securities Purchase Agreement, and the
Registration Rights Agreement, all dated October 26, 2004. The warrant has a
five year term. The value of the warrants, according to a Black-Sholes
calculation, was $114,000.

During the second quarter 2005
------------------------------

On June 10, 2005, the Company granted a warrant to purchase 1,000,000 shares
of common stock with a purchase price of $0.20 to a consultant for the Company
pursuant to the Company's Stock Plan and a Consultant Agreement. The warrant has
a five year term. The value of the warrants, according to a Black-Sholes
calculation, was $107,000.

During the third quarter 2005
-----------------------------

On July 20, 2005, the Company issued 6,750,000 shares of its common stock for
services. The fair value o these shares at the date of issuance was $1,485,000.

On August 16, 2005, the Company issued 1,500,000 shares of its common stock for
services. The fair value o these shares at the date of issuance was $320,000.

On September 9, 2005 the Company issued 16,667 post 1:12 split shares of its
common stock to an investor in the Company's predecessor, American Career
Centers. The investor had purchased 200,000 shares prior to the split on March
12, 2002 for $20,000 but the shares were never issued.

On September 13, 2005, the Company issued 300,000 shares of its common stock for
services. The fair value of these shares at the date of issuance was $87,000.

On September 16, 2005, the Company issued 950,000 shares of its common stock for
services. The fair value of these shares at the date of issuance was $266,000.

During the fourth quarter of 2005
---------------------------------

Subscribed for 40,000 shares of its common stock and received $10,000.

On November 10, 2005 the Company issued 3,000,000 shares of its common stock for
services. The fair value of these shares at the date of issuance was $510,000.

                                       31
<PAGE>



                   Prime Star Group, Inc. and Its Subsidiaries
                 Notes to the Consolidated Financial Statements
                             As of December 31, 2008


During the first quarter, 2006
------------------------------

On January 6, 2006, the Company issued 33,333,333 shares of its common stock to
retire a note payable from its' Chairman, and major stockholder. The fair value
of these shares at the date of issuance was $1,700,000.

On January 23, 2006 the Company issued 7,000,000 shares of its common stock for
services. The fair value of these shares at the date of issuance was $210,000.

On February 23, 2006, the Company issued 1,487,500 shares of its common stock in
settlement of a lawsuit. The fair value of these shares at the date of issuance
was $29,750.

On March 28, 2006, the Company issued 2,287,500 shares of its common stock for
legal services rendered. The fair value of these shares at the date of issuance
was $45,750.

On November 18, 2005, the Board of Directors authorized Roger Mohlman's request
to convert the notes payable to him by the Company into shares of the Company's
common stock thereby reducing the Company's current liabilities by approximately
$1,700,000. The conversion rate was $0.05 per share based on the reported market
price of the Company's common stock on the date of conversion of January 6,
2006. At December 31, 2005, this transaction is reflected in the Stockholders'
Equity section of the balance sheet as a stock issuance obligation.

     o   Options and Warrants

     o   During the first quarter of 2005, we issued warrants to purchase
         1,500,000 shares of common stock to Laurus Master Fund, Ltd. The value
         of the warrants using the Black-Scholes method was $107,000 that was
         recorded as additional paid-in capital.

     o A summary of stock options and warrants is as follows:
<TABLE>
<CAPTION>
<S>      <C> <C>              <C>                  <C>          <C>                     <C>

---------------------------------------------------------------------------------------------
                                      Weighted Average                     Weighted Average
                         Options           Price            Warrants        Exercise Price
Outstanding at
December 31, 2006             600,000              $.77         13,376,538              $.48
Granted                           ---               ---                ---               ---
Cancelled                    (600,000)            $(.77)       (13,376,538)            $(.48)
Exercised
Outstanding at
December 31, 2007                 ---              $---                ---              $---
</TABLE>

                                       32
<PAGE>


ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
       DISCLOSURE

We had no changes in or disagreements with accountants on accounting and
financial disclosure.

ITEM 9A  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our President and Chief Financial Officer (the "Certifying Officer") has
evaluated the effectiveness of our disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934)
as of the end of period covered by this report. Based upon such evaluation, the
Certifying Officer concluded that our disclosure controls and procedures were
not effective to ensure that the information required to be disclosed by us in
the reports that we file or submit under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commission's rules and forms, and is accumulated
and communicated to our management, including the Certifying Officer, as
appropriate to allow timely decisions regarding required disclosure, due to the
material weaknesses described below.

Management's Report on Internal Control over Financial Reporting

Our management, including the Certifying Officer, is responsible for
establishing and maintaining adequate internal control over financial reporting,
as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of
1934. Our internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of our financial
reporting and the preparation of our financial statements for external purposes
in accordance with generally accepted accounting principles. Our internal
control over financial reporting includes those policies and procedures that:
(i) pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of our assets, (ii) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America, and that our receipt and
expenditures are being made only in accordance with authorizations of management
and our Board of Directors; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of our assets that could have a material effect on the financial statements.

All internal control systems, no matter how well designed, have inherent
limitations. A system of internal control may become inadequate over time
because of changes in conditions or deterioration in the degree of compliance
with the policies or procedures. Therefore, even those systems determined to be
effective can provide only reasonable assurance with respect to financial
statement preparation and presentation.

Our management assessed the effectiveness of our internal control over financial
reporting as December 31, 2008 using the criteria set forth by the Commission of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal
Control-Integrated Framework. Based on this assessment, our management concluded
that, as of December 31, 2008, our internal control over financial reporting
disclosure controls and procedures were not effective to ensure that the
information required to be disclosed by us in the reports that we file or submit
under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms, and is accumulated and communicated to our
management, including the Certifying Officer, as appropriate to allow timely
decisions regarding required disclosure, due to the material weaknesses
described below.

In light of the material weaknesses described below, our management, including
the Certifying Officer, performed additional analysis and other post-closing
procedures to ensure our financial statements were prepared in accordance with
generally accepted accounting principles. Accordingly, we believe that the
financial statements included in this report fairly present, in all material
respects, our financial condition, results of operations and cash flows for the
periods presented.

                                       33
<PAGE>

A material weakness is a control deficiency (within the meaning of the Public
Company Accounting Oversight Board ("PCAOB") Auditing Standard No. 2) or
combination of control deficiencies, which result in more than a remote
likelihood that a material misstatement of the annual or interim financial
statements will not be prevented or detected. The management has identified the
following five material weaknesses which have caused the management to conclude
that our disclosure controls and procedures were not effective at the reasonable
assurance level:

1. We have not documented our internal controls. We were required to provide
written documentation of key internal controls and assess the effectiveness of
our internal controls over financial reporting beginning with our fiscal year
ending December 31, 2008. Management evaluated the impact of our failure to have
written documentation of our internal controls and procedures on our assessment
of our disclosure controls and procedures and has concluded that the control
deficiency that resulted represented a material weakness.

2. We did not have adequate internal controls with respect to recording and
reconciling salary accruals and advances to/from related parties. It was
determined that certain advances were not properly recorded. Management will
implement a process to record and reconcile such amounts in connection with the
preparation of its financial statements.

To address these material weaknesses, our management performed additional
analyses and other procedures to ensure that the financial statements included
herein fairly present, in all material respects, our financial position, results
of operations and cash flows for the periods presented. Accordingly, we believe
that the financial statements included in this report fairly present, in all
material respects, our financial condition, results of operations and cash flows
for the periods presented.

Remediation of Material Weaknesses

To remediate the material weaknesses in our documentation, evaluation and
testing of internal controls, we plan to engage a third-party firm to assist us
in remedying these material weaknesses.

To further remediate the material weaknesses, we now require written
documentation for all related-party transactions and a review by all personnel
responsible for financial reporting, prior to filing our periodic reports under
the Securities Exchange Act of 1934.

ITEM 9B OTHER INFORMATION

There is no other information at this time.

                                       34
<PAGE>

                                    PART III

ITEM 10  DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
<TABLE>
<CAPTION>
<S>                      <C>

Name                        Age                                Position(s) and Office(s)
------------------------ ----------- -------------------------------------------------------------------------------
Roger Mohlman            61          Chief Executive Officer, Chief Financial Officer, Secretary, Director
KD Austin                45          Secretary
</TABLE>

Roger Mohlman: Mr. Mohlman joined the company in April 2002 and brings over 30
years of successful experience in licensing products and business development.
During the past 27 years, Mr. Mohlman has held "Who's Who" recognitionfor his
expertise in securing licenses in the apparel and novel industries, including
the NFL, NBA and NHL. He has a wealth of experience in restructuring many high
growth businesses and in servicing mass-merchandising accounts. He brings
vision, experience, talent, contacts and drive that will contribute
significantly to the company's future success.

KD Austin Ms. Austin began working with the company in 2007. Her expertise is in
corporate formation and compliance. She has a background in accounting and
record keeping as well as 23 years of customer service experience.


Compliance with Section 16(a)of the Exchange Act

Section 16(a) of the Securities Exchange Act of 1934 requires our directors,
officers and persons who own more than 10% of a registered class of our equity
securities to file with the SEC initial reports of ownership and reports of
changes in ownership of common stock and other equity securities. Officers,
directors and greater than 10% shareholders are required by SEC regulations to
furnish us with copies of all Section 16(a) forms they file.

To the best of our knowledge, since December 31, 2007, no delinquencies
occurred.

                                       35
<PAGE>



Code of Ethics

We have adopted a Code of Ethics that applies to our principal executive
officer, principal financial officer, and principal accounting officer. Our Code
of Ethics was an exhibit to our Annual Report on Form 10-K for the fiscal year
ended December 31, 2002 and filed with the SEC on April 16, 2003.

ITEM 11.                  EXECUTIVE COMPENSATION

Summary Compensation Table

Set forth below is a summary of compensation for our principal executive officer
and our two most highly compensated officers other than our principal executive
officer (collectively, the "named executive officers") for our last two fiscal
years. There have been no annuity, pension or retirement benefits ever paid to
our officers, directors or employees.

With the exception of reimbursement of expenses incurred by our named executive
officers during the scope of their employment and unless expressly stated
otherwise in a footnote below, none of the named executive officers received
other compensation, perquisites and/or personal benefits in excess of $10,000.
<TABLE>
<CAPTION>
<S>                  <C>                                      <C>             <C>    <C>    <C>          <C>          <C>
                                                                                                  Non-equity
                                                                                                  Incentive
Name and                                                                           Stock  Option     Plan      All Other
Principal                                                           Salary   Bonus Awards Awards Compensation Compensation
Position                                                      Year    ($)     ($)   ($)    ($)       ($)          ($)      Total ($)
------------------------------------------------------------- ---- --------- ----- ------ ------ ------------ ------------ ---------
Roger H. Mohlman, CEO(1)                                      2008 $deferred  $-0-   $-0-   $-0-         $-0-         $-0- $deferred
</TABLE>

(1)  Mr. Mohlman has served as Chief Executive Officer,  President, and director
     of  American  Water Star since June 2002.  In July 2003,  he was also named
     Chairman of the Board and Chief  Financial  Officer of American Water Star.
     Mr.  Mohlman's  salary was deferred for American Water Star's 2007 and 2008
     fiscal years.



Employment Agreements

Roger Mohlman: Effective January 1, 2003, we entered into an employment
agreement with Roger Mohlman to serve as our President and CEO. Prior to that
date, Mr. Mohlman did not have an employment agreement. The term of the
employment contract was for one year from the effective date. The contract could
be extended for an additional two years upon both parties mutual consent. The
initial annual base compensation for 2003 was set at $120,000 (subject to
increase by the Board of Directors), stock options, annual bonus in accordance
with American Water Star's performance, and various benefits. In February 2004,
pursuant to a resolution of the Board, the employment agreement was extended for
two years and Mr. Mohlman's base salary was set at $240,000. In 2003, we accrued
the $120,000 base salary and awarded Mr. Mohlman compensation of approximately
$42,500 for his services to us commencing in August 2002, all of which
compensation was paid in April 2004. No compensation has been awared to Mr.
Mohlman for 2007 and 2008.


Director Compensation

In general, our directors are not compensated for their services, but are
entitled for reimbursement of expenses incurred in attending board of directors
meetings.


                                       36
<PAGE>


Grants of Plan Based Awards

There were no grants of plan-based awards during our last fiscal year.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

The following table sets forth certain information concerning the stock
ownership as of the date of this Report, with respect to: (i) each person who is
known to the Company to  beneficially  own more than 5% of the Company's  common
stock; (ii) each officer and director; and (iii) all directors and officers as a
group; based upon 1,716,678 shares of common stock outstanding.

<TABLE>
<CAPTION>
<S>                                  <C>                             <C>                    <C>
     --------------------------------------------------------    ----------------    ----------------------------
     Name of Beneficial Owner                                    Number of               Percent of
                                                                 Shares                   Ownership(3)
     --------------------------------------------------------    ----------------    ----------------------------
     Roger Mohlman,
        President, CEO, and Chairman (4)                             623,767                36.3%
                                                                 ----------------    ----------------------------
     Total of all Officers, Directors, and Beneficial Owners         623,767                36.3%
                                                                 ================    ============================
</TABLE>


ITEM 13    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
           INDEPENDENCE

None.

ITEM 14    PRINCIPAL ACCOUNTING FEES AND SERVICES

Gruber & Companyh, LLC (the "Independent Auditors") were our independent
auditors and examined our financial statements for the years ended December 31,
2008 and 2007, respectively. The Independent Auditors performed the services
listed below and were as paid the aggregate fees listed below for the years
ended December 31, 2008 and 2007.

                                       37
<PAGE>

Audit Fees

The Independent Auditors were paid aggregate fees of approximately $25,000 for
the fiscal year ended December 31, 2008 and approximately $25,000 for the fiscal
year ended December 31, 2007 for professional services rendered for the audit of
our annual financial statements and for the reviews of the financial statements
included in our quarterly reports on Form 10-QSB during these periods.

Audit Related Fees

The Independent Auditors were not paid additional fees for either the year ended
December 31, 2008 or the fiscal year ended December 31, 2007 for assurance and
related services reasonably related to the performance of the audit or review of
our financial statements.

Tax Fees

The Independent Auditors were not paid fees for the year ended December 31, 2008
or the fiscal year ended December 31, 2007 for professional services rendered
for tax compliance, tax advice and tax planning during this fiscal year period.

All Other Fees

The Independent Auditors were not paid any other fees for professional services
during the year ended December 31, 2008 or the fiscal year ended December 31,
2007.


ITEM 15  EXHIBITS, FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
<C>                                                               <C>       <C>   <C>       <C>         <C>   <C>


                                                                             Incorporated by reference
                                                                ----------------------------------------------------
                                                     Filed                 Period
 Exhibit      Exhibit Description                    herewith    Form      ending         Exhibit     Filing date
--------------------------------------------------------------------------------------------------------------------
3(i)(a)      Articles of Incorporation                            10-KSB    12/31/99        3.1         04/13/00
3(i)(b)      Certificate of Amendment to the                      10-KSB    12/31/99        3.2         04/13/00
             Articles of Incorporation
3(i)(d)      Certificate of Amendment to the                      10-QSB    03/31/02        3.4         05/20/02
             Articles of Incorporation
3(ii)(a)     Bylaws of the Company                                10-KSB    12/31/99        3.3         04/13/00
4.1          Certificate of Change in Number of                     S-8                     4.3         04/05/02
             Authorized Shares
4.2          Certificate of Designation Series A                    S-8                     4.4         04/05/02
             Convertible Preferred Stock
4.3          Amended Stock Plan                                   10-QSB    09/30/04        4.1         11/19/04
4.4          Securities Purchase Agreement with                     8-K                     4.1         11/04/04
             Laurus Master Fund, Ltd.
4.5          Registration Rights Agreement with                     8-K                     4.2         11/04/04
             Laurus Master Fund, Ltd.
4.6          Master Security Agreement with Laurus                  8-K                     4.3         11/04/04
             Master Fund, Ltd.
4.7          Subsidiary Agreement between All-Star                  8-K                     4.4         11/04/04
             Beverages and Laurus Master Fund, Ltd.
10.1         Employment Agreement with Roger Mohlman              10-KSB    12/31/02       10.4         04/16/03
10.2         Trademark and Design License Agreement               10-KSB    12/31/02       10.6         04/16/03
             for use of Hawaiian Tropic name
</TABLE>


                                       38
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                 <C>                     <C>         <C>   <C>
10.3         Employment Agreement with Daniel Beckett               8-K                     10          05/19/05
10.4         Forbearance Agreement with Laurus                      8-K                    10.1         08/10/05
             Master Fund, Ltd.
10.5         Secured Convertible Note with Laurus                   8-K                    10.2         08/10/05
             Master Fund, Ltd.
10.6         Master Security Agreement with Laurus                  8-K                    10.3         08/10/05
             Master Fund, Ltd.
10.7         Subsidiary Guarantee with Laurus Master                8-K                    10.4         08/10/05
             Fund, Ltd
10.8         Deed of Trust, Assignments of Rents,                   8-K                    10.5         08/10/05
             Security Agreement and Fixture Filing
             for the benefit of Laurus Master Fund
14.1         Code of Ethics                                       10-KSB    12/31/02       14.1         04/16/03
16.1         Letter by L.L. Bradford & Company, LLC                8-K/A                    16          06/25/07
16.2         Letter by Weaver & Martin, LLC                        8-K/A                    16          07/24/07
20.1         Notice of Trustee's Sale                               8-K                    10.1         12/29/05
20.2         Copy of the Statement of Breach or                     8-K                    10.2         12/29/05
             Non-Performance and Notice of Election
             to Sell
31           Certification of the Company's Principal     *
             Executive Officer and Chief Financial
             Officer pursuant to Section 302 of the
             Sarbanes-Oxley Act of 2002, with respect
             to the registrant's Annual Report on
             Form 10-K for the year ended
             December 31, 2008.
32           Certification of the Company's Principal     *
             Executive Officer and Chief Financial
             Officer pursuant to 18 U.S.C. Section
             1350, as adopted pursuant to Section 906
             of the Sarbanes Oxley Act of 2002

</TABLE>


                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                    PRIME STAR GROUP, INC.


DATED: April 15, 2009               /s/ Roger H. Mohlman
                                    --------------------------------------------
                                    By: Roger H. Mohlman
                                    Its: Chief Executive Officer and Chief
                                    Financial Officer
                                    (Principal Executive Officer, Principal
                                    Financial
                                    Officer and Principal Accounting Officer)


                                       39