---

Exhibit 13.2

Raft River Energy I LLCFinancial Statements December 31, 2010 and 2009

---

|Raft River Energy I LLC         
|--------------------------------
|Index                           
|December
      31, 2010 and 2009

|                                     | Page(s)
|------------------------------------ | -------
|Report of Independent
      Auditors | 1      
|Financial Statements                 |        
|Balance Sheets                       | 2      
|Statements of Operations             | 3      
|Statements of Cash Flows             | 4      
|Statement of Members' Equity         | 5      
|Notes to the Financial Statements    | 6-14   

---

Report of Independent Auditors

To the Members of Raft River Energy I LLC:

In our opinion, the accompanying balance sheetsand the
related statements of operations, of cash flows and of members' equity present
fairly, in all material respects, the financial position of Raft River Energy I
LLC at December 31, 2010 and December 31, 2009, and the results of its
operations and its cash flows for the fiscal years ended December 31, 2010,
December 31, 2009, November 28, 2008 and for the one-month period ended December
26, 2008 in conformity with accounting principles generally accepted in the
United States of America. These 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 of
these statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit 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, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

As discussed in Note 4 to the financial statements, the Company
has entered into significant transactions with certain related parties.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP Portland, Oregon March 15,
2011

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|Raft River Energy I LLC         
|--------------------------------
|Balance Sheets                  
|December
      31, 2010 and 2009

|                                                           |   | December 31, |   |   | December 31, |  
|---------------------------------------------------------- | - | ------------ | - | - | ------------ | -
|                                                           |   | 2010         |   |   | 2009*        |  
|Assets                                                     |   |              |   |   |              |  
|Current                                                    |   |              |   |   |              |  
|Cash and cash
      equivalents                            | $ | 255,726      |   | $ | 175,688      |  
|Accounts receivable, trade                                 |   | 469,415      |   |   | 463,791      |  
|Accounts receivable,
      related party                   |   | -            |   |   | 26,935       |  
|Inventory, parts and supplies                              |   | 158,243      |   |   | 116,188      |  
|Other current assets                                       |   | 25,482       |   |   | 25,482       |  
|Total current assets                                       |   | 908,866      |   |   | 808,084      |  
|Property, plant and equipment (net)                        |   |              |   |   |              |  
|Property and equipment, net accumulated
      depreciation |   | 45,939,087   |   |   | 47,967,225   |  
|Construction in
      progress                             |   | -            |   |   | 26,036       |  
|Total property, plant and
      equipment (net)            |   | 45,939,087   |   |   | 47,993,261   |  
|Total assets                                               | $ | 46,847,953   |   | $ | 48,801,345   |  
|Liabilities and Members' Equity                            |   |              |   |   |              |  
|Current                                                    |   |              |   |   |              |  
|Accounts payable and accrued
      liabilities             | $ | 210,395      |   | $ | 218,284      |  
|Accounts payable,
      related party                      |   | 224,530      |   |   | 572,832      |  
|Total current liabilities                                  |   | 434,925      |   |   | 791,116      |  
|Commitments and contingencies (Note
      5)               |   |              |   |   |              |  
|Members' equity                                            |   |              |   |   |              |  
|Class A units - Raft
      River Holdings, LLC             |   | 33,705,975   |   |   | 33,943,416   |  
|Class B units - U.S. Geothermal Inc.                       |   | 16,892,344   |   |   | 17,504,708   |  
|Accumulated deficit                                        |   | (4,185,291   | ) |   | (3,437,895   | )
|Total members' equity                                      |   | 46,413,028   |   |   | 48,010,229   |  
|Total liabilities
      and members' equity                | $ | 46,847,953   |   | $ | 48,801,345   |  

* - See change in fiscal year end, Note 9

The accompanying notes are an integral part of these financial
statements.

2

---

|Raft River Energy I LLC                     
|--------------------------------------------
|Statements of Operations                    
|Years
      Ended December 31, 2010 and 2009

|                                    |   | For the Year |   |   | For the Year |   |   | For the Month |   |   | For the Year |  
|----------------------------------- | - | ------------ | - | - | ------------ | - | - | ------------- | - | - | ------------ | -
|                                    |   | Ended        |   |   | Ended        |   |   | Ended         |   |   | Ended        |  
|                                    |   | December 31, |   |   | December 31, |   |   | December 26,  |   |   | November 28, |  
|                                    |   | 2010         |   |   | 2009*        |   |   | 2008*         |   |   | 2008         |  
|Operating revenue                   |   |              |   |   |              |   |   |               |   |   |              |  
|Energy sales                        | $ | 3,988,090    |   | $ | 4,281,588    |   | $ | 486,295       |   | $ | 4,285,076    |  
|Renewable energy credit sales       |   | 554,387      |   |   | 437,361      |   |   | 51,536        |   |   | 595,228      |  
|Total operating revenues            |   | 4,542,477    |   |   | 4,718,949    |   |   | 537,831       |   |   | 4,880,304    |  
|Operating expenses                  |   |              |   |   |              |   |   |               |   |   |              |  
|Insurance                           |   | 227,273      |   |   | 225,619      |   |   | 16,934        |   |   | 191,116      |  
|Office and administration           |   | 71,047       |   |   | 51,216       |   |   | 1,227         |   |   | 37,859       |  
|Travel and promotion                |   | 9,367        |   |   | 9,486        |   |   | 396           |   |   | 22,879       |  
|Management and professional fees    |   | 400,985      |   |   | 518,582      |   |   | (79,334       | ) |   | 466,427      |  
|Plant and well field                |   | 1,019,929    |   |   | 2,523,365    |   |   | 53,753        |   |   | 1,392,098    |  
|Salaries and related costs          |   | 760,715      |   |   | 806,904      |   |   | (47,743       | ) |   | 616,205      |  
|Lease, rent and royalties           |   | 140,538      |   |   | 118,027      |   |   | 11,740        |   |   | 206,554      |  
|Utilities                           |   | 612,929      |   |   | 695,874      |   |   | 58,929        |   |   | 608,197      |  
|Depreciation                        |   | 2,047,238    |   |   | 2,048,682    |   |   | 169,446       |   |   | 1,719,927    |  
|Loss on equipment disposal          |   | -            |   |   | -            |   |   | -             |   |   | 147,958      |  
|Total operating expenses            |   | 5,290,021    |   |   | 6,997,755    |   |   | 185,348       |   |   | 5,409,220    |  
|Income (loss) from
      operations |   | (747,544     | ) |   | (2,278,806   | ) |   | 352,483       |   |   | (528,916     | )
|Other income                        |   |              |   |   |              |   |   |               |   |   |              |  
|Interest income                     |   | 148          |   |   | 8,088        |   |   | 477           |   |   | 80,323       |  
|Total other income                  |   | 148          |   |   | 8,088        |   |   | 477           |   |   | 80,323       |  
|Net income (loss)                   | $ | (747,396     | ) | $ | (2,270,718   | ) | $ | 352,960       |   | $ | (448,593     | )

* - See change in fiscal year end, Note 9

The accompanying notes are an integral part of these financial
statements.

3

---

|Raft River Energy I LLC                     
|--------------------------------------------
|Statement of Cash Flows                     
|Years
      Ended December 31, 2010 and 2009

|                                                                         |   | For the Year |   |   | For the Year |   |   | For the Month |   |   | For the Year |  
|------------------------------------------------------------------------ | - | ------------ | - | - | ------------ | - | - | ------------- | - | - | ------------ | -
|                                                                         |   | Ended        |   |   | Ended        |   |   | Ended         |   |   | Ended        |  
|                                                                         |   | December 31, |   |   | December 31, |   |   | December 26,  |   |   | November 28, |  
|                                                                         |   | 2010         |   |   | 2009*        |   |   | 2008*         |   |   | 2008         |  
|Cash flow from operating
      activities                                |   |              |   |   |              |   |   |               |   |   |              |  
|Net loss                                                                 | $ | (747,396     | ) | $ | (2,270,718   | ) | $ | 352,960       |   | $ | (448,593     | )
|Add (deduct) items not affecting
      cash                              |   |              |   |   |              |   |   |               |   |   |              |  
|Depreciation                                                             |   | 2,047,238    |   |   | 2,048,682    |   |   | 169,446       |   |   | 1,719,927    |  
|Loss on disposal
      of equipment                                      |   | -            |   |   | -            |   |   | -             |   |   | 147,958      |  
|Other noncash items                                                      |   | (20,716      | ) |   | (25,000      | ) |   | -             |   |   | (27,000      | )
|Net changes in                                                           |   |              |   |   |              |   |   |               |   |   |              |  
|Accounts receivable                                                      |   | 21,311       |   |   | 47,694       |   |   | 29,115        |   |   | (481,469     | )
|Inventory                                                                |   | (42,055      | ) |   | (45,290      | ) |   | (3,176        | ) |   | (67,722      | )
|Accounts payable and accrued
      liabilities                           |   | (356,191     | ) |   | 401,683      |   |   | 11,366        |   |   | 365,892      |  
|Other current
      assets                                               |   | -            |   |   | 72,653       |   |   | 16,934        |   |   | (107,403     | )
|Total cash provided by operating activities                              |   | 902,191      |   |   | 229,704      |   |   | 576,645       |   |   | 1,101,590    |  
|                                                                         |   |              |   |   |              |   |   |               |   |   |              |  
|Cash flow from investing activities                                      |   |              |   |   |              |   |   |               |   |   |              |  
|Purchases of property, plant and
      equipment                         |   | (19,100      | ) |   | (303,924     | ) |   | (973,966      | ) |   | (4,713,254   | )
|Sale of construction materials                                           |   | 20,252       |   |   | -            |   |   | -             |   |   | -            |  
|Total cash used by investing
      activities                            |   | 1,152        |   |   | (303,924     | ) |   | (973,966      | ) |   | (4,713,254   | )
|                                                                         |   |              |   |   |              |   |   |               |   |   |              |  
|Cash flow from financing
      activities                                |   |              |   |   |              |   |   |               |   |   |              |  
|Capital distributions to member U.S. Geothermal Inc.                     |   | (612,363     | ) |   | (448,934     | ) |   | -             |   |   | -            |  
|Capital distributions to member Raft River
      Holdings, LLC           |   | (237,442     | ) |   | (199,684     | ) |   | -             |   |   | (27,000      | )
|Noncash operating distributions to member Raft River
      Holdings, LLC |   | 26,500       |   |   | 25,000       |   |   | -             |   |   | 27,000       |  
|Capital contributions from member U.S.
      Geothermal Inc.             |   | -            |   |   | -            |   |   | -             |   |   | 4,714,926    |  
|Total cash provided by financing activities                              |   | (823,305     | ) |   | (623,618     | ) |   | -             |   |   | 4,714,926    |  
|                                                                         |   |              |   |   |              |   |   |               |   |   |              |  
|Increase (decrease) in cash and cash
      equivalents                   |   | 80,038       |   |   | (697,838     | ) |   | (397,321      | ) |   | 1,103,262    |  
|                                                                         |   |              |   |   |              |   |   |               |   |   |              |  
|Cash and cash equivalents at the Beginning of
      period               |   | 175,688      |   |   | 873,526      |   |   | 1,270,847     |   |   | 167,585      |  
|                                                                         |   |              |   |   |              |   |   |               |   |   |              |  
|Cash and cash equivalents at the End of
      period                     | $ | 255,726      |   | $ | 175,688      |   | $ | 873,526       |   | $ | 1,270,847    |  
|                                                                         |   |              |   |   |              |   |   |               |   |   |              |  
|Schedule of noncash transactions                                         |   |              |   |   |              |   |   |               |   |   |              |  
|Equipment contributed by member U.S.
      Geothermal Inc.               | $ | -            |   | $ | -            |   | $ | -             |   | $ | 300,000      |  
|                                                                         |   |              |   |   |              |   |   |               |   |   |              |  
|Other Items                                                              |   |              |   |   |              |   |   |               |   |   |              |  
|Accounts payable for capital
      expenditures                          |   | -            |   |   | -            |   |   | 111,194       |   |   | 1,056,345    |  
|                                                                         |   |              |   |   |              |   |   |               |   |   |              |  
|* - See change in fiscal year end, Note 9                                |   |              |   |   |              |   |   |               |   |   |              |  

The accompanying notes are an integral part of these financial
statements.

4

---

|Raft River Energy I LLC                     
|--------------------------------------------
|Statement of Members' Equity                
|Years
      Ended December 31, 2010 and 2009

|                                     |   | Class A Units - |   |   | Class B Units - |   |   |            |  
|------------------------------------ | - | --------------- | - | - | --------------- | - | - | ---------- | -
|                                     |   | Raft River      |   |   | U.S. Geothermal |   |   |            |  
|                                     |   | Holdings        |   |   | Inc.            |   |   | Totals     |  
|Balances at
      November 30, 2007  | $ | 33,360,043      |   | $ | 12,677,228      |   | $ | 46,037,271 |  
|Capital contributions                |   | -               |   |   | 5,014,926       |   |   | 5,014,926  |  
|Distributions                        |   | (27,000         | ) |   | -               |   |   | (27,000    | )
|Net loss                             |   | (292,533        | ) |   | (156,060        | ) |   | (448,593   | )
|Balances at
      November 28, 2008  |   | 33,040,510      |   |   | 17,536,094      |   |   | 50,576,604 |  
|Net income                           |   | 298,247         |   |   | 54,713          |   |   | 352,960    |  
|Balances at
      December 26, 2008* |   | 33,338,757      |   |   | 17,590,807      |   |   | 50,929,564 |  
|Correction of error (Note 8)         |   | (797,429        | ) |   | 797,429         |   |   | -          |  
|Distributions                        |   | (199,684        | ) |   | (448,933        | ) |   | (648,617   | )
|Net income (loss)                    |   | (2,549,790      | ) |   | 279,072         |   |   | (2,270,718 | )
|Balances at
      December 31, 2009* |   | 29,791,854      |   |   | 18,218,375      |   |   | 48,010,229 |  
|Distributions                        |   | (237,442        | ) |   | (612,363        | ) |   | (849,805   | )
|Net income (loss)                    |   | (1,122,449      | ) |   | 375,053         |   |   | (747,396   | )
|Balances at December 31,
      2010  | $ | 28,431,963      |   | $ | 17,981,065      |   | $ | 46,413,028 |  

* - See change in fiscal year end, Note 9

The accompanying notes are an integral part of these financial
statements.

5

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|Raft River Energy I LLC          
|---------------------------------
|Notes to the Financial Statements
|December
      31, 2010 and 2009 

|1. | Organization and Description of Business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Raft River Energy I LLC (the "Company") is a limited
      liability company organized in the State of Delaware by U.S. Geothermal
      Inc. on August 18, 2005, for the purpose of constructing and operating a
      geothermal power plant located near Malta, Idaho. The Company's power
      plant is considered to be phase I of a Raft River, Idaho geothermal
      project expected to consist of three phases. As defined in the Membership
      Admission agreement, the Company is owned by U.S. Geothermal Inc. and Raft
      River I Holdings LLC, which is a Delaware limited liability company that
      is a subsidiary of The Goldman Sachs Group Inc. (collectively referred to
      as "the members"). As defined in the Management Services Agreements, U.S.
      Geothermal Services LLC, (a wholly owned subsidiary of U.S. Geothermal
      Inc.) is the Company's Operator.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|2. | Summary of Significant Accounting
  Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Accounting Method                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Company's financial statements are prepared using the accrual basis of
      accounting in accordance with accounting principles generally accepted in
      the United States of America ("GAAP") which have been consistently applied.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Accounts Receivable and Allowance for Doubtful
      Accounts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Accounts receivable are stated at their estimated net
      realizable value. The Company has considered the economic conditions,
      historical trends, contractual terms and financial stability of its major
      customer when calculating an allowance for uncollectible accounts. At each
      fiscal year end, management determined that all accounts receivable were
      collectible and an accrual for an allowance for doubtful accounts was not
      necessary. Uncollectible accounts are removed when they are deemed
      uncollectible. Recovered bad debts are recorded as income in the period
      collected.                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Allocation of Profits and Losses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Company utilizes the hypothetical liquidation at book value method ("HLBV")
      for allocating profits and losses. This method utilizes the specific terms
      outlined in the entity's organizational contracts and other authoritative
      documents. These terms include cash disbursement terms, associated
      financial instruments, debt arrangements, and rights to specific revenue
      streams.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | According to the operating agreement, upon liquidation
      and after payment of all outstanding debts, remaining funds will be
      distributed to the Members based on to their respective positive capital
      account balance ratios. Certain contract provisions contain allocation of
      profit and loss items to arrive at the capital account balances. See Note
      8.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Cash and cash equivalents consist of cash deposits and
      short term instruments with original maturities of no more than ninety
      days.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Concentration of Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Company's cash and cash equivalents consisted of commercial bank
      deposits and a money market account.All cash equivalents are held in a
      commercial bank located in Boise, Idaho. Deposits held in the checking
      account are subject to Federal Deposit Insurance Corporation (FDIC) up to
      $250,000 (level extended through December 31, 2013). The Company's cash
      deposits, at December 31, 2010, totaled $323,674 ($73,674 exceeded FDIC
      coverage limits).                                                                                                                                                                                                                                                                                                                                                                                                         

6

---

|Raft River Energy I LLC          
|---------------------------------
|Notes to the Financial Statements
|December
      31, 2010 and 2009 

Contributed Capital and Membership
Structure

Agreements between U.S. Geothermal Inc.
and Raft River Holdings LLC were completed for construction financing of Phase I
of the Raft River project. To accommodate the construction financing, U.S.
Geothermal, Inc. sold 50% of its ownership in the Company to Raft River Holdings
in August 2006, with U.S. Geothermal Inc. owning 500 Class B member units and
Raft River Holdings owning 500 Class A member units.

As of December 31, 2010, U.S.
Geothermal Inc. has contributed $17,953,640 ($16,892,344, net of distributions
of $1,061,296) in cash and property to the project, while Raft River I Holdings
LLC has contributed $34,170,100 ($33,705,975, net of distributions of $464,125)
in cash. Profits and losses have been allocated according to the HLBV
method.

Estimates

The preparation of financial statements
in accordance with generally accepted accounting principles requires the use of
estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities known to exist as
of the date the financial statements are published, and the reported amounts of
revenues and expenses during the reporting period. Uncertainties with respect to
such estimates and assumptions are inherent in the preparation of the Company's
financial statements; accordingly, it is possible that the actual results could
differ from these estimates and assumptions and could have a material effect on
the reported amounts of the Company's financial position and results of
operations.

Financial Instruments

The Company's financial instruments
consist of cash and cash equivalents, accounts receivable, accounts
receivable-related party, accounts payable and accrued liabilities. Unless
otherwise noted, it is management's opinion that the Company is not exposed to
significant interest currency or credit risks arising from these financial
instruments. The fair values of these financial instruments approximate their
carrying values, unless otherwise noted.

Impairment of Long-Lived Assets

The Company evaluates long-lived assets
for impairment in accordance with Accounting Standards Codification (ASC) No.
360, Property, Plant, & Equipment. Accordingly, the Company evaluates
its long-term assets annually for impairment, or when circumstances or events
occur that may impact the fair value of the assets. Management believes that
there have not been any circumstances that have warranted the recognition of
losses due to the impairment of long-lived assets as of December 31, 2010 and
December 31, 2009.

Inventory

Inventory consists of supplies and
replacement parts needed to maintain the power plant and are not intended for
resale. Upon purchase, items are recorded at cost and maintained at the lesser
of cost or fair market value. Inventory items are charged to operations in the
period they are utilized.

Lease Arrangements

Arrangements which potentially convey
the right to use property, plant, or equipment for a stated period of time are
analyzed in accordance with financial reporting pronouncements that address
determining whether an arrangement contains a lease to assess whether they
should be accounted for as leases. For any arrangements that are found to meet
the definition of a lease, an assessment is made as to whether they are capital
leases or operating leases in accordance with accounting standards.

7

---

|Raft River Energy I LLC          
|---------------------------------
|Notes to the Financial Statements
|December
      31, 2010 and 2009 

Property, Plant and Equipment

Costs of acquisition of geothermal
properties are capitalized on a geothermal reservoir basis. If a geothermal
reservoir is abandoned, the costs thereof are charged to income in the year of
abandonment. Property, plant and equipment are recorded at historical cost.
Depreciation is calculated on a straight-line basis over the estimated useful
life of the asset. Major improvements that significantly increase the useful
lives and/or the capabilities of the assets are capitalized. Expenditures for
repairs and maintenance are charged to expense as incurred.

Estimated useful lives by asset
categories are summarized as follows:

| |                                              | Estimated Useful
| | -------------------------------------------- | ----------------
| | Asset Categories                             | Lives in Years  
| |                                              |                 
| | Furniture, vehicle and other
      equipment | 4 years         
| | Power plant, buildings and improvements      | 1530 years     
| | Wells                                        | 30 years        
| | Well pumps and components                    | 515 years      
| | Pipelines                                    | 30 years        
| | Transmission lines                           | 30 years        

Revenue

Revenue Recognition

Energy Sales

The Company's primary operating revenue
originates from electrical power generated by the Company's geothermal power
plant. The revenue is recognized when the power is produced and delivered to the
customer who is reasonably assured to be able to pay under the terms defined in
the Power Purchase Agreement ("PPA").

Renewable Energy Credits

Revenues from Renewable Energy Credits
("RECs") are recognized when the Company has met the terms of certain energy
sales agreements with a financially capable buyer and has met the applicable
governing regulations. The Company earns one REC for each megawatt hour produced
from the geothermal power plant. Each REC is certified by Western Electricity
Coordinating Council Council ("WREGIS") and sold under a REC Purchase and Sales
Agreement.

Revenue Source

All of the Company's energy sales are
received from one major power company that, primarily, operates in the State of
Idaho. All of the power generated originates from the one power plant that
utilizes a geothermal reservoir located in southeastern Idaho. Approximately 92%
of the accounts receivable balance at December 31, 2010, represented a balance
due from one major customer.

8

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|Raft River Energy I LLC          
|---------------------------------
|Notes to the Financial Statements
|December
      31, 2010 and 2009 

|3. | Property, Plant And Equipment                                         
|-- | ----------------------------------------------------------------------
|   |                                                                       
|   | Property, plant and equipment, at cost, are detailed as
      follows:

| |                                         |   | December 31, |   |   | December 31, |  
| | --------------------------------------- | - | ------------ | - | - | ------------ | -
| |                                         |   | 2010         |   |   | 2009         |  
| | Furniture and equipment                 | $ | 73,431       |   | $ | 73,431       |  
| | Power plant, buildings and improvements |   | 26,703,390   |   |   | 26,684,290   |  
| | Wells                                   |   | 15,339,317   |   |   | 15,339,317   |  
| | Well pumps                              |   | 2,719,361    |   |   | 2,719,361    |  
| | Pipelines                               |   | 5,555,598    |   |   | 5,555,598    |  
| | Transmission lines                      |   | 1,538,107    |   |   | 1,538,107    |  
| |                                         |   | 51,929,204   |   |   | 51,910,104   |  
| | Less: Accumulated depreciation          |   | (5,990,117   | ) |   | (3,942,879   | )
| |                                         |   | 45,939,087   |   |   | 47,967,225   |  
| | Construction in progress                |   | -            |   |   | 26,036       |  
| |                                         | $ | 45,939,087   |   | $ | 47,993,261   |  

|   | At December 31, 2009, construction in progress consisted
      of materials used for drilling activities. All of these materials were
      either sold, at cost, or put into operations during the year ended
      December 31, 2010. See Note 4.      
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                          
|4. | Related Party Transactions                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                          
|   | The amounts payable to U.S. Geothermal Inc. and U.S.
      Geothermal Services, LLC as of December 31, 2010 and December 31, 2009,
      were $224,530 and $572,832; respectively. The amounts payable are
      unsecured and due on demand.            
|   |                                                                                                                                                                                                                                                          
|   | At December 31, 2009, the Company had a balance of
      $26,935 receivable from USG Oregon, LLC. The receivable resulted from a
      sale of construction materials at the original purchase price. The balance
      was paid in full in January 2010.
|   |                                                                                                                                                                                                                                                          
|   | During the year ended December 31, 2010, materials
      classified as construction in progress at December 31, 2009 for $20,252
      were sold, at cost, to USG Oregon, LLC and USG Nevada, LLC.                                                       
|   |                                                                                                                                                                                                                                                          
|   | U.S. Geothermal Inc. is the managing member of the
      Company. U.S. Geothermal Services, LLC, USG Nevada, LLC and USG Oregon,
      LLC are wholly owned subsidiaries of U.S. Geothermal
Inc.                                                         

9

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|Raft River Energy I LLC          
|---------------------------------
|Notes to the Financial Statements
|December
      31, 2010 and 2009 

The Company's related party
transactions are summarized as follows:

| |                                  |   | For the Year |  |   | For the Year |  |   | For the Month |  |   | For the Year | 
| | -------------------------------- | - | ------------ |  | - | ------------ |  | - | ------------- |  | - | ------------ | 
| |                                  |   | Ended        |  |   | Ended        |  |   | Ended         |  |   | Ended        | 
| |                                  |   | December 31, |  |   | December 31, |  |   | December 26,  |  |   | November 28, | 
| |                                  |   | 2010         |  |   | 2009         |  |   | 2008          |  |   | 2008         | 
| | Capital expenditures             | $ | -            |  | $ | -            |  | $ | -             |  | $ | 87,510       | 
| | Insurance                        |   | 227,273      |  |   | 152,966      |  |   | -             |  |   | -            | 
| | Office and administration        |   | 68,128       |  |   | 50,040       |  |   | 1,084         |  |   | 31,298       | 
| | Travel and promotion             |   | 9,367        |  |   | 9,385        |  |   | 385           |  |   | 22,879       | 
| | Management and professional fees |   | 304,084      |  |   | 279,173      |  |   | 20,585        |  |   | 291,925      | 
| | Plant and well field             |   | 873,499      |  |   | 2,440,351    |  |   | 34,523        |  |   | 1,000,351    | 
| | Salaries and related costs       |   | 760,715      |  |   | 706,904      |  |   | 48,809        |  |   | 616,205      | 
| | Lease, rent and royalties        |   | 111,360      |  |   | 92,050       |  |   | 10,140        |  |   | 163,219      | 
| | Utilities                        |   | 3,354        |  |   | 11,653       |  |   | 1,517         |  |   | 7,383        | 
| |                                  | $ | 2,357,780    |  | $ | 3,742,522    |  | $ | 117,043       |  | $ | 2,220,770    | 

Management Services Agreement

The Company has entered into a
management services agreement with U.S. Geothermal Services, LLC 3management
company ́ effective August 9, 2006, to provide certain management and operating
services. The contract terminates upon the earlier of mutual agreement of the
contracting parties or on August 9, 2028. The quarterly management fee starts at
$62,500, and in addition there are incentive payments linked to certain
performance targets. If the Company does not have sufficient funds to pay the facility's necessary
operating expenses in a particular month,
the management fee shall be deferred with no interest penalty.

The actual management fee is subject to
contracted adjustments based upon financial performance of the Company
calculated on a semi-annual basis. In the event that actual results exceed
expected results a bonus shall be earned. For the first $10,000, whereby the
actual results exceed the expected results, the bonus shall equal 10% of the
difference. If the difference between the actual results and the expected result
is more than $10,000, the second component shall equal 50% of the excess over
$10,000. The second component bonus amount shall not exceed $20,000. In the
event that expected results exceed actual results the management fee shall be
reduced. If the difference between the expected results and actual results is
less than or equal to $175,000, then the management company shall pay the
absolute value of the difference multiplied by 10%. If the difference between
the expected results and actual results is in excess of $175,000, then the
management company shall pay the Company the amount equal to absolute value of
the difference in excess of $175,000.

10

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|Raft River Energy I LLC          
|---------------------------------
|Notes to the Financial Statements
|December
      31, 2010 and 2009 

The Company paid U.S. Geothermal
Services, LLC management services for the fiscal periods as follows:

| |                                       |   | Management | 
| | ------------------------------------- | - | ---------- | 
| | Fiscal Period                         |   | Fees       | 
| | For the Year Ended November 28, 2008  | $ | 227,708    | 
| | For the Month Ended December 26, 2008 |   | 18,958     | 
| | For the Year Ended December 31, 2009  |   | 253,333    | 
| | For the Year Ended December 31, 2010  |   | 250,000    | 

Well Field Lease Contract

On November 2, 2006, the Company signed
a lease contract with a primary term of 20 years for the groundwater rights
needed for cooling purposes at the Facility payable to U.S. Geothermal Inc.
("lessor"). The annual rate of $90,000 is based upon the facility's expected
needs of 900 acre feet per annum ("a.f.a.") ($10,000 per 100 a.f.a.). Based upon
the needs of the facility and proper notice given by the lessor, the contract
allows for an increase in the amount of water available for lease according to
the noted rate. The payments are due annually within ten business days following
the anniversary of the "placed in service" date which is the date of the
facility became commercially
operational. During the fiscal year ended November 28, 2008, the Company paid
the lessor the "initial rent payment" of $90,000 due for the period of time from
the contract date to the to
the initial placed in service date, as well as an additional $74,475 for current
year lease costs. Lease costs of $90,000 were paid in the year ended December
31, 2010.

The schedule of estimated lease payments for the primary
contract term is as follows:

| | For the Year Ended December 31, |   | Amounts   | 
| | ------------------------------- | - | --------- | 
| | 2011                            | $ | 90,000    | 
| | 2012                            |   | 90,000    | 
| | 2013                            |   | 90,000    | 
| | 2014                            |   | 90,000    | 
| | 2015                            |   | 90,000    | 
| | Thereafter                      |   | 990,000   | 
| | Total                           | $ | 1,440,000 | 

Geothermal Water and Land Lease

On October 19, 2006, the Company signed
a lease contract with U.S. Geothermal Inc. ("lessor") that is effective as long
as the Company is utilizing the resource. The contract provides the lessee
exclusive geothermal water rights and nonexclusive land rights to 903 acres
located in Raft River, Idaho. For the first 5 years ("primary term") the lease
rate will be $5.00 per acre with an initial setup fee of $3,300. After the
primary term, the lease will be based on a royalty of 10% of net proceeds. Net
proceeds is defined as generated electric power, less deductions of the sum of
direct operating costs, property taxes, franchise taxes, marketing expenses and
depreciation. Depreciation will be calculated on a 15 year straight-line basis.
During the year ended December 31, 2010, the Company paid lease costs of $4,515.
As of December 31, 2010, the Company owed the lessor $16,845 in unpaid lease
costs that was paid in full in January 2011.

11

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|Raft River Energy I LLC          
|---------------------------------
|Notes to the Financial Statements
|December
      31, 2010 and 2009 

|5. | Commitments And Contingencies                                                                                                                                                                                                                             
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                           
|   | Operating Lease Agreements                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                           
|   | The Company has entered into several lease agreements
      with terms expiring up to December 1, 2033, for geothermal properties
      adjoining the Raft River Geothermal Property. The schedule of estimated
      annual lease payments is as follows:

| | For the Year Ended December 31, |   | Amounts*  | 
| | ------------------------------- | - | --------- | 
| | 2011                            | $ | 125,115   | 
| | 2012                            |   | 120,936   | 
| | 2013                            |   | 121,287   | 
| | 2014                            |   | 121,357   | 
| | 2015                            |   | 118,544   | 
| | Thereafter                      |   | 1,410,535 | 
| | Total                           | $ | 2,017,774 | 

* The schedule includes the expected
annual related party well field, water and land lease payments described in Note
4.

The terms of the management services
agreement, the well field lease contract, and the water and land lease contract
are described in Note 4.

Power Purchase Agreement

The Company signed a 20 year power
purchase agreement dated December 29, 2004 with Idaho Power Company for sale of
power generated from its planned phase one power plant. It has been determined
this meets the definition of a lease arrangement under current accounting
pronouncements and is accounted for as an operating lease. As there is no
minimum payment, lease income will be recognized as revenue when sales of power
occur.

Power Transmission

The Company has 27 year interconnection
and wheeling agreement with Raft River Rural Electric Cooperative, Inc. with a
date of execution of March 9, 2006. The contract specifies a 15 year extension
subject to the renewal of the right of way agreement with the Bureau of Land
Management. The interconnection and wheeling agreement provides for the
transmission of electricity from the plant to the Bonneville Power
Administration ("BPA") substation. On June 24, 2005, the Company signed a 30
year transmission agreement with a start date of June 1, 2006, with BPA for
transmission of electricity from the BPA substation to Idaho Power.

Renewable Energy Credits

The Company signed a 10 year contract
on July 29, 2006, to sell renewable energy credits to Holy Cross Energy. After
the Holy Cross Energy contract has expired, the Company will sell renewable
energy credits to the Public Utility District of Clallam County, Washington, in
accordance with a 17 year contract signed December 2010.

12

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|Raft River Energy I LLC          
|---------------------------------
|Notes to the Financial Statements
|December 31, 2010 and 2009       

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|6. | Members' Interests                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The Company has issued two classes of member units, the Class A units and the Class B units. Each class of ownership gives the owner participating rights in the business and results in equity ownership risks. The rights attached
to the different classes will vary over time, in accordance with the terms of the Membership Admission Agreement. The agreement requires the Company to track separately the capital accounts of the members after November 24, 2006. The profits and
losses of the Company are allocated based upon the HLBV method as discussed in Note 2. For income tax purposes, the Class A units will receive a greater proportion of the share of losses and other income tax benefits. This includes the allocation of
production tax credits, which will be distributed 99% to the Class A units and 1% to the class B units during the first 10 years of production.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Under the terms of the Membership Admission Agreement, as of
November 28, 2008, Raft River I Holdings LLC, has contributed their full
obligation of $34.2 million in cash, and U.S. Geothermal Inc. has contributed
$17.9 million in assets to the Company. U.S. Geothermal Inc.'s contribution
consisted of $16.5 in cash and approximately $1.4
million in property. Based upon the Operating Agreement, loans made by Members
to the Company shall not be considered capital contributions. Based upon the
advances made to the Company by a Member shall be payable only out of the
Company's property in accordance with the terms and the conditions upon which
such advances are made.                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|7. | Income Tax                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The Company is a Limited
    Liability Corporation that is treated as a partnership for tax purposes with
    each of the Members accounting for their share of the tax attributes and
    liabilities. Accordingly, there are no deferred income tax amounts recorded
    in these financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|8. | Error Correction                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | After re-examining the
    provisions of the Membership Admission Agreement prior to the issuance of
    the financial statements for the year ended December 31, 2009, Management
    determined that the profit and loss allocation method applied in the prior
    periods was not consistent with generally accepted accounting principles.
    This change is considered to be a correction of an error. To fairly allocate
    profits and losses between the members, the Company adopted the HLBV method.
    The adjustments reallocate the member equity balances as if the profits and
    losses had been allocated with the HLBV method from the Company's inception
    to December 31, 2009. Net earnings/losses or total member's equity balances
    are not affected by the reallocation.                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | We assessed the materiality
    of this error on financial statements for prior periods and concluded that
    the error was not material to any periods presented. Accordingly, the
    Balance Sheet and Statement of Members' Equity herein have been revised to
    correct for the cumulative amount of this error in the year ended December
    31, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

13

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|Raft River Energy I LLC          
|---------------------------------
|Notes to the Financial Statements
|December 31, 2010 and 2009       



|   |                       
|-- | ----------------------
|9. | Fiscal Year-End Change

Due to the changes imposed on Member
A's parent company, the Company was required to changeits fiscal year-end from November to December, beginning with fiscal 2009. This
change in the Company's fiscal year-end resulted in a one-month transition
period that began on November 29, 2008 and ended on December 26, 2008. Fiscal
year 2009 began on December 27, 2008 and ended on December 31, 2009. Financial
information for this fiscal transition period is included in these financial
statements.

The following summarized financial
information was presented to compare operating results for the transition
period:

| |                                   |   |              |  |   | (Unaudited)  | 
| | --------------------------------- | - | ------------ |  | - | ------------ | 
| |                                   |   | Month Ended  |  |   | Month Ended  | 
| |                                   |   | December 26, |  |   | December 28, | 
| |                                   |   | 2008         |  |   | 2007         | 
| | Operating revenues                | $ | 537,831      |  | $ | 233,257      | 
| | Operating expenses                |   | 185,348      |  |   | 111,692      | 
| | Gain (loss) from
      operations |   | 352,483      |  |   | 121,565      | 
| | Other income                      |   | 477          |  |   | 1,768        | 
| | Net income (loss)                 | $ | 352,960      |  | $ | 123,333      | 

14

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