CODE OF ETHICS AND BUSINESS CONDUCT
                    FOR OFFICERS, DIRECTORS AND EMPLOYEES OF
                            AMERICAN WATER STAR, INC.
                              AND ITS SUBSIDIARIES

1. TREAT IN AN ETHICAL  MANNER THOSE TO WHOM THE COMPANY HAS AN  OBLIGATION  The
officers,  directors  and  employees  of  American  Water  Star,  Inc.  and  its
subsidiaries  (collectively,  the  "Company")  are  committed  to honesty,  just
management,  fairness,  providing a safe and healthy  environment  free from the
fear  of  retribution,   and  respecting  the  dignity  due  everyone.  For  the
communities  in  which  we live  and  work we are  committed  to  observe  sound
environmental  business  practices  and  to  act as  concerned  and  responsible
neighbors, reflecting all aspects of good citizenship.

For our  shareholders  we are  committed  to pursuing  sound growth and earnings
objectives and to exercising prudence in the use of our assets and resources.

For our  suppliers  and partners we are  committed to fair  competition  and the
sense of responsibility required of a good customer and teammate.

2. PROMOTE A POSITIVE WORK ENVIRONMENT

All employees want and deserve a workplace where they feel respected, satisfied,
and appreciated.  We respect cultural diversity and will not tolerate harassment
or  discrimination of any kind -- especially  involving race,  color,  religion,
gender, age, national origin, disability, and veteran or marital status.

Providing an  environment  that supports  honesty,  integrity,  respect,  trust,
responsibility, and citizenship permits us the opportunity to achieve excellence
in our workplace.  While  everyone who works for the Company must  contribute to
the  creation  and  maintenance  of  such an  environment,  our  executives  and
management  personnel  assume  special   responsibility  for  fostering  a  work
environment  that is free from the fear of  retribution  and will  bring out the
best in all of us.  Supervisors  must be careful  in words and  conduct to avoid
placing, or seeming to place,  pressure on subordinates that could cause them to
deviate from acceptable ethical behavior.

3. PROTECT YOURSELF, YOUR FELLOW EMPLOYEES, AND THE WORLD WE LIVE IN

We are  committed to providing a drug-free,  safe and healthy work  environment,
and to observing  environmentally sound business practices. We will strive, at a
minimum,  to do no harm and where possible,  to make the communities in which we
work a better  place to live.  Each of us is  responsible  for  compliance  with
environmental, health and safety laws and regulations.


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4. KEEP ACCURATE AND COMPLETE RECORDS

We must maintain accurate and complete Company records. Transactions between the
Company  and  outside   individuals  and  organizations  must  be  promptly  and
accurately entered in our books in accordance with generally accepted accounting
practices  and   principles.   No  one  should   rationalize  or  even  consider
misrepresenting  facts or falsifying  records. It will not be tolerated and will
result in disciplinary action.

5. OBEY THE LAW

We will  conduct  our  business  in  accordance  with  all  applicable  laws and
regulations.  Compliance  with the law  does not  comprise  our  entire  ethical
responsibility.  Rather,  it is a minimum,  absolutely  essential  condition for
performance of our duties. In conducting business, we shall:

       A. STRICTLY ADHERE TO ALL ANTITRUST LAWS

       Officer,  directors and employees  must strictly  adhere to all antitrust
       laws.  Such laws exist in the United  States and in many other  countries
       where the Company may conduct business.  These laws prohibit practices in
       restraint  of trade such as price  fixing  and  boycotting  suppliers  or
       customers.  They also bar  pricing  intended to run a  competitor  out of
       business;  disparaging,   misrepresenting,  or  harassing  a  competitor;
       stealing trade secrets; bribery; and kickbacks.

       B. STRICTLY COMPLY WITH ALL SECURITIES LAWS

       In our role as a publicly owned  company,  we must always be alert to and
       comply with the security  laws and  regulations  of the United States and
       other countries.

              (i) DO NOT ENGAGE IN SPECULATIVE OR INSIDER TRADING

              Federal law and Company policy prohibits  officers,  directors and
              employees,  directly  or  indirectly  through  their  families  or
              others,  from  purchasing  or selling  company  stock while in the
              possession  of material,  non-public  information  concerning  the
              Company.  This same prohibition applies to trading in the stock of
              other publicly held companies on the basis of material, non-public
              information. To avoid even the appearance of impropriety,  Company
              policy also  prohibits  officers,  directors  and  employees  from
              trading  options  on the open  market in Company  stock  under any
              circumstances.

              Material,  non-public  information is any  information  that could
              reasonably  be  expected  to affect  the  price of a stock.  If an
              officer,  director or employee is considering  buying or selling a
              stock  because of inside  information  they  possess,  they should
              assume that such information is material. It is also important for
              the  officer,  director  or  employee  to keep in mind that if any
              trade they make  becomes  the subject of an  investigation  by the
              government,  the  trade  will be  viewed  after-the-fact  with the
              benefit  of  hindsight.  Consequently,   officers,  directors  and
              employees should always carefully  consider how their trades would
              look from this perspective.


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              Two simple rules can help protect you in this area: (1) Do not use
              non-public  information  for personal  gain. (2) Do not pass along
              such information to someone else who has no need to know.

              This  guidance also applies to the  securities of other  companies
              for which you receive information in the course of your employment
              at the Company.

              (ii) BE TIMELY  AND  ACCURATE  IN ALL  PUBLIC  REPORTS

              As a public company,  the Company must be fair and accurate in all
              reports  filed  with the United  States  Securities  and  Exchange
              Commission.  Officers, directors and management of the Company are
              responsible  for  ensuring  that all reports are filed in a timely
              manner and that they fairly  present the  financial  condition and
              operating  results of the Company.

              Securities laws are vigorously enforced.  Violations may result in
              severe  penalties  including forced sales of parts of the business
              and  significant  fines  against  the  Company.  There may also be
              sanctions against individual employees including substantial fines
              and  prison  sentences.

              The principal  executive  officer and principal  financial Officer
              will  certify to the  accuracy  of  reports  filed with the SEC in
              accordance  with  the  Sarbanes-Oxley  Act of 2002.  Officers  and
              Directors who knowingly or willingly make false certifications may
              be subject to criminal penalties or sanctions  including fines and
              imprisonment.

6. AVOID CONFLICTS OF INTEREST

Our officers,  directors and employees have an obligation to give their complete
loyalty to the best interests of the Company.  They should avoid any action that
may involve,  or may appear to involve, a conflict of interest with the Company.
Officers,  directors  and  employees  should  not  have any  financial  or other
business  relationships  with  suppliers,  customers or  competitors  that might
impair, or even appear to impair, the independence of any judgment they may need
to make on behalf of the Company.

HERE ARE SOME WAYS A CONFLICT OF INTEREST COULD ARISE:

       o      Employment by a competitor, or potential competitor, regardless of
              the nature of the employment, while employed by the Company.

       o      Acceptance of gifts, payment, or services from those seeking to do
              business with the Company.


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       o      Placement  of  business  with a firm  owned  or  controlled  by an
              officer, director or employee or his/her family.

       o      Ownership  of, or  substantial  interest  in, a company  that is a
              competitor, client or supplier.

       o      Acting as a consultant to a Company customer, client or supplier.

       o      Seeking the  services or advice of an  accountant  or attorney who
              has provided services to the Company.

Officers, directors and employees are under a continuing obligation to disclose
any situation that presents the possibility of a conflict or disparity of
interest between the officer, director or employee and the Company. Disclosure
of any potential conflict is the key to remaining in full compliance with this
policy.

7. COMPETE ETHICALLY AND FAIRLY FOR BUSINESS OPPORTUNITIES

We must comply with the laws and regulations that pertain to the acquisition of
goods and services. We will compete fairly and ethically for all business
opportunities. In circumstances where there is reason to believe that the
release or receipt of non-public information is unauthorized, do not attempt to
obtain and do not accept such information from any source.

If you are involved in Company transactions, you must be certain that all
statements, communications, and representations are accurate and truthful.

8. AVOID ILLEGAL AND QUESTIONABLE GIFTS OR FAVORS

The sale and marketing of our products and services should always be free from
even the perception that favorable treatment was sought, received, or given in
exchange for the furnishing or receipt of business courtesies. Officers,
directors and employees of the Company will neither give nor accept business
courtesies that constitute, or could be reasonably perceived as constituting,
unfair business inducements or that would violate law, regulation or policies of
the Company, or could cause embarrassment to or reflect negatively on the
Company's reputation.

9. MAINTAIN THE INTEGRITY OF CONSULTANTS, AGENTS, AND REPRESENTATIVES

Business  integrity is a key standard for the  selection  and retention of those
who represent the Company. Agents,  representatives and consultants must certify
their willingness to comply with the Company's  policies and procedures and must
never be retained to  circumvent  our values and  principles.  Paying  bribes or
kickbacks, engaging in industrial espionage, obtaining the proprietary data of a
third party without  authority,  or gaining inside  information or influence are
just a few examples of what could give us an unfair  competitive  advantage  and
could result in violations of law.


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10. PROTECT PROPRIETARY INFORMATION

Proprietary Company information may not be disclosed to anyone without proper
authorization. Keep proprietary documents protected and secure. In the course of
normal business activities, suppliers, customers and competitors may sometimes
divulge to you information that is proprietary to their business. Respect these
confidences.

11. OBTAIN AND USE COMPANY ASSETS WISELY

Personal use of Company property must always be in accordance with corporate
policy. Proper use of Company property, information resources, material,
facilities and equipment is your responsibility. Use and maintain these assets
with the utmost care and respect, guarding against waste and abuse, and never
borrow or remove Company property without management's permission.

12. FOLLOW THE LAW AND USE COMMON SENSE IN POLITICAL CONTRIBUTIONS AND
ACTIVITIES The Company encourages its employees to become involved in civic
affairs and to participate in the political process. Employees must understand,
however, that their involvement and participation must be on an individual
basis, on their own time and at their own expense. In the United States, federal
law prohibits corporations from donating corporate funds, goods, or services,
directly or indirectly, to candidates for federal offices -- this includes
employees' work time. Local and state laws also govern political contributions
and activities as they apply to their respective jurisdictions.

13. BOARD COMMITTEES.

The Company shall establish an Audit Committee empowered to enforce this Code of
Ethics. The Audit Committee will report to the Board of Directors at least once
each year regarding the general effectiveness of the Company's Code of Ethics,
the Company's controls and reporting procedures and the Company's business
conduct.

14. DISCIPLINARY MEASURES.

The Company shall consistently enforce its Code of Ethics and Business Conduct
through appropriate means of discipline. Violations of the Code shall be
promptly reported to the Audit Committee. Pursuant to procedures adopted by it,
the Audit Committee shall determine whether violations of the Code have occurred
and, if so, shall determine the disciplinary measures to be taken against any
employee or agent of the Company who has so violated the Code.

The disciplinary measures, which may be invoked at the discretion of the Audit
Committee, include, but are not limited to, counseling, oral or written
reprimands, warnings, probation or suspension without pay, demotions, reductions
in salary, termination of employment and restitution.


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Persons subject to disciplinary measures shall include, in addition to the
violator, others involved in the wrongdoing such as (i) persons who fail to use
reasonable care to detect a violation, (ii) persons who if requested to divulge
information withhold material information regarding a violation, and (iii)
supervisors who approve or condone the violations or attempt to retaliate
against employees or agents for reporting violations or violators.