Exhibit 13.2

RAFT RIVER ENERGY I LLC

Financial Statements

November 28, 2008

---

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 November 28, 2008 and November 30, 2007, and the results of its
operations and its cash flows for the three years in the period ended November
28, 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.

PricewaterhouseCoopers LLP

February 16, 2009 Portland, Oregon

---

RAFT RIVER ENERGY I LLC

BALANCE SHEETS

|                                                           |   | November 28, |   |   | November 30, |  
|---------------------------------------------------------- | - | ------------ | - | - | ------------ | -
|                                                           |   | 2008         |   |   | 2007         |  
|                                                           |   |              |   |   |              |  
|ASSETS                                                     |   |              |   |   |              |  
|Current:                                                   |   |              |   |   |              |  
|Cash and cash equivalents                                  | $ | 1,270,847    |   | $ | 167,585      |  
|Accounts receivable                                        |   | 540,600      |   |   | 59,131       |  
|Inventory                                                  |   | 67,722       |   |   | -            |  
|Other current assets                                       |   | 115,069      |   |   | 7,666        |  
|Total current assets                                       |   | 1,994,238    |   |   | 234,382      |  
|                                                           |   |              |   |   |              |  
|Property, Plant and
      Equipment:                       |   |              |   |   |              |  
|Property and equipment, net accumulated
      depreciation |   | 49,595,456   |   |   | 44,225       |  
|Construction in progress                                   |   | 421,323      |   |   | 50,011,450   |  
|Total property, plant and equipment
      (net)            |   | 50,016,779   |   |   | 50,055,675   |  
|                                                           |   |              |   |   |              |  
|Total Assets                                               | $ | 52,011,017   |   | $ | 50,290,057   |  
|                                                           |   |              |   |   |              |  
|LIABILITIES                                                |   |              |   |   |              |  
|Current:                                                   |   |              |   |   |              |  
|Accounts payable and accrued liabilities                   | $ | 1,272,555    |   | $ | 4,136,786    |  
|Related party accounts payable                             |   | 161,858      |   |   | 116,000      |  
|Total current liabilities                                  |   | 1,434,413    |   |   | 4,252,786    |  
|                                                           |   |              |   |   |              |  
|MEMBERS EQUITY                                            |   |              |   |   |              |  
|Class A units - Raft River Holdings, LLC                   |   | 34,143,100   |   |   | 34,170,100   |  
|Class B units - U.S. Geothermal Inc.                       |   | 17,953,640   |   |   | 12,938,714   |  
|Accumulated deficit                                        |   | (1,520,136   | ) |   | (1,071,543   | )
|Total members' equity                                      |   | 50,576,604   |   |   | 46,037,271   |  
|                                                           |   |              |   |   |              |  
|Total Liabilities and Members' Equity                      | $ | 52,011,017   |   | $ | 50,290,057   |  

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

-1-

---

RAFT RIVER ENERGY I LLC

STATEMENTS OF OPERATIONS

|                                       |   |              |   |   | For the Year |   |   | For the Year |  
|-------------------------------------- | - | ------------ | - | - | ------------ | - | - | ------------ | -
|                                       |   | For the Year |   |   | Ended        |   |   | Ended        |  
|                                       |   | Ended        |   |   | November 30, |   |   | November 24, |  
|                                       |   | November 28, |   |   | 2007         |   |   | 2006         |  
|                                       |   | 2008         |   |   | (Note 7      | ) |   | (Note 7      | )
|                                       |   |              |   |   |              |   |   |              |  
|Operating
      Revenue:               |   |              |   |   |              |   |   |              |  
|Energy sales                           | $ | 4,285,076    |   | $ | 96,743       |   | $ | -            |  
|Renewable energy credit sales          |   | 595,228      |   |   | -            |   |   | -            |  
|Total
      operating revenues         |   | 4,880,304    |   |   | 96,743       |   |   | -            |  
|                                       |   |              |   |   |              |   |   |              |  
|Operating Expenses:                    |   |              |   |   |              |   |   |              |  
|Insurance                              |   | 191,116      |   |   | 17,858       |   |   | 9,514        |  
|Office and administration              |   | 37,859       |   |   | 58,424       |   |   | 100,430      |  
|Travel and promotion                   |   | 22,879       |   |   | 33,774       |   |   | 27,868       |  
|Management
      and professional fees |   | 466,427      |   |   | 458,489      |   |   | 10,971       |  
|Plant and well field                   |   | 1,392,098    |   |   | 193,041      |   |   | 17,820       |  
|Salaries and related costs             |   | 616,205      |   |   | 171,202      |   |   | 79,276       |  
|Lease, rent and royalties              |   | 206,554      |   |   | 61,265       |   |   | -            |  
|Utilities                              |   | 608,197      |   |   | 24,450       |   |   | -            |  
|Depreciation                           |   | 1,719,927    |   |   | 7,855        |   |   | -            |  
|Loss
      on equipment disposal       |   | 147,958      |   |   | -            |   |   | -            |  
|Total operating expenses               |   | 5,409,220    |   |   | 1,026,358    |   |   | 245,879      |  
|                                       |   |              |   |   |              |   |   |              |  
|Loss from
      Operations             |   | (528,916     | ) |   | (929,615     | ) |   | (245,879     | )
|                                       |   |              |   |   |              |   |   |              |  
|Other Income:                          |   |              |   |   |              |   |   |              |  
|Other income                           |   | -            |   |   | -            |   |   | 86           |  
|Interest income                        |   | 80,323       |   |   | 95,381       |   |   | 8,484        |  
|Total other income                     |   | 80,323       |   |   | 95,381       |   |   | 8,570        |  
|                                       |   |              |   |   |              |   |   |              |  
|Net Loss                               | $ | (448,593     | ) | $ | (834,234     | ) | $ | (237,309     | )

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

-2-

---

RAFT RIVER ENERGY I LLC

STATEMENTS OF CASH FLOWS

|                                                                |   | For the Year |   |   | For the Year |   |   | For the Year |  
|--------------------------------------------------------------- | - | ------------ | - | - | ------------ | - | - | ------------ | -
|                                                                |   | Ended        |   |   | Ended        |   |   | Ended        |  
|                                                                |   | November 28, |   |   | November 30, |   |   | November 24, |  
|                                                                |   | 2008         |   |   | 2007         |   |   | 2006         |  
|                                                                |   |              |   |   |              |   |   |              |  
|Cash Flow from
      Operating Activities:                      |   |              |   |   |              |   |   |              |  
|Net loss                                                        | $ | (448,593     | ) | $ | (834,234     | ) | $ | (237,309     | )
|Add/deduct items not
      affecting cash:                      |   |              |   |   |              |   |   |              |  
|Depreciation                                                    |   | 1,719,927    |   |   | 7,855        |   |   | 1,925        |  
|Loss on disposal of equipment                                   |   | 147,958      |   |   | -            |   |   | -            |  
|Distribution of capital for operating expenses                  |   | (27,000      | ) |   | -            |   |   | -            |  
|Net changes in:                                                 |   |              |   |   |              |   |   |              |  
|Accounts receivable                                             |   | (481,469     | ) |   | (59,131      | ) |   | -            |  
|Inventory                                                       |   | (67,722      | ) |   | -            |   |   | -            |  
|Accounts payable and accrued liabilities                        |   | 365,892      |   |   | (42,897      | ) |   | 55,073       |  
|Other current assets                                            |   | (107,403     | ) |   | 1,016        |   |   | (8,682       | )
|Total cash provided (used) by operating activities              |   | 1,101,590    |   |   | (927,391     | ) |   | (188,993     | )
|                                                                |   |              |   |   |              |   |   |              |  
|Cash Flow from Investing
      Activities:                      |   |              |   |   |              |   |   |              |  
|Purchases of property, plant and equipment                      |   | (4,713,254   | ) |   | (30,509,135  | ) |   | (13,951,996  | )
|Total
      cash used by investing activities                   |   | (4,713,254   | ) |   | (30,509,135  | ) |   | (13,951,996  | )
|                                                                |   |              |   |   |              |   |   |              |  
|Cash Flow from Financing
      Activities:                      |   |              |   |   |              |   |   |              |  
|Proceeds from revolving loan facility                           |   | -            |   |   | -            |   |   | 4,917,000    |  
|Repayment of revolving load facility                            |   | -            |   |   | -            |   |   | (4,917,000   | )
|Capital
      contributions from member U.S. Geothermal Inc.    |   | 4,714,926    |   |   | 6,575,000    |   |   | 5,000,000    |  
|Capital
      contributions from member Raft River Holding, LLC |   | -            |   |   | 21,620,000   |   |   | 12,550,100   |  
|Total cash provided by financing activities                     |   | 4,714,926    |   |   | 28,195,000   |   |   | 17,550,100   |  
|                                                                |   |              |   |   |              |   |   |              |  
|Increase (Decrease) in
      Cash and Cash Equivalents          |   | 1,103,262    |   |   | (3,241,526   | ) |   | 3,409,111    |  
|                                                                |   |              |   |   |              |   |   |              |  
|Cash and Equivalents at
      the Beginning of the Period       |   | 167,585      |   |   | 3,409,111    |   |   | -            |  
|                                                                |   |              |   |   |              |   |   |              |  
|Cash and Equivalents at the End of
      Period                 | $ | 1,270,847    |   | $ | 167,585      |   | $ | 3,409,111    |  

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

-3-

---

RAFT RIVER ENERGY I LLC

STATEMENTS OF CASH FLOWS - Continued

|                                                           |   | For the Year |  |   | For the Year |  |   | For the Year | 
|---------------------------------------------------------- | - | ------------ |  | - | ------------ |  | - | ------------ | 
|                                                           |   | Ended        |  |   | Ended        |  |   | Ended        | 
|                                                           |   | November 28, |  |   | November 30, |  |   | November 24, | 
|                                                           |   | 2008         |  |   | 2007         |  |   | 2006         | 
|                                                           |   |              |  |   |              |  |   |              | 
|Schedule of
      Non-Cash Transactions:                   |   |              |  |   |              |  |   |              | 
|Equipment contributed by member U.S.
      Geothermal Inc. | $ | 300,000      |  | $ | -            |  | $ | 1,363,714    | 
|                                                           |   |              |  |   |              |  |   |              | 
|Other Items:                                               |   |              |  |   |              |  |   |              | 
|Accounts payable for capital expenditures                  | $ | 1,056,345    |  | $ | 4,240,610    |  | $ | 3,304,979    | 

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

-4-

---

RAFT RIVER ENERGY I LLC

STATEMENT OF MEMBERS' EQUITY

|                                 |   |                 |   |   | Class B Units - |   |   |            |  
|-------------------------------- | - | --------------- | - | - | --------------- | - | - | ---------- | -
|                                 |   | Class A Units - |   |   | U.S.            |   |   |            |  
|                                 |   | Raft River      |   |   | Geothermal,     |   |   |            |  
|                                 |   | Holdings        |   |   | Inc.            |   |   | Total      |  
|                                 |   |                 |   |   |                 |   |   |            |  
|Balance, November
      25, 2005 | $ | -               |   | $ | -               |   | $ | -          |  
|Capital Contributions            |   | 12,550,100      |   |   | 6,363,714       |   |   | 18,913,814 |  
|Net loss                         |   | (136,915        | ) |   | (100,394        | ) |   | (237,309   | )
|                                 |   |                 |   |   |                 |   |   |            |  
|Balance, November
      24, 2006 |   | 12,413,185      |   |   | 6,263,320       |   |   | 18,676,505 |  
|                                 |   |                 |   |   |                 |   |   |            |  
|Capital Contributions            |   | 21,620,000      |   |   | 6,575,000       |   |   | 28,195,000 |  
|Net
      loss                   |   | (673,142        | ) |   | (161,092        | ) |   | (834,234   | )
|                                 |   |                 |   |   |                 |   |   |            |  
|Balance, 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   | )
|                                 |   |                 |   |   |                 |   |   |            |  
|Balance, November 28, 2008       | $ | 33,040,510      |   | $ | 17,536,094      |   | $ | 50,576,604 |  

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

-5-

---

RAFT RIVER ENERGY I LLC

NOTES TO THE FINANCIAL STATEMENTS NOVEMBER 28, 2008

NOTE 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.

NOTE 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 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.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash deposits and short
term instruments with maturities of no more than ninety days when acquired.

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 regular checking
account are subject to Federal Deposit Insurance Corporation (FDIC) up to
$250,000. The Companys cash deposits, at November 28, 2008, totaled $1,270,886
($1,190,887 was not FDIC insured). The money market funds, at November 28, 2008,
totaled $12,275, and were not subject to FDIC insurance.

-6-

---

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, with U.S. Geothermal
Inc. owning 500 Class B member units and Raft River Holdings owning 500 Class A
member units.

As of November 28, 2008, U.S. Geothermal Inc. has contributed
$17,953,640 in cash and property to the project, while Raft River I Holdings LLC
has contributed $34,143,100 (net of distributions of $27,000) in cash. Losses
prior to the date of the agreements (from inception to July 2006) have been
allocated 100% to U.S. Geothermal Inc., while profits and losses subsequent to
the agreements (August 2006 to November 2008) have been allocated based on the
capital contribution ratio.

Change from Development Stage

Pursuant to Statement of Financial Accounting Standards No. 7,
Accounting and Reporting by Development Stage Enterprises (SFAS 7), the
Company was considered to be a development stage enterprise prior to January 3,
2008. Among other provisions, SFAS 7 stipulated the reporting of inception to
date results of operations, cash flows and other financial information. On
January 3, 2008, the Company began generating revenues from planned commercial
operations. Consequently, these financial statements are reported in accordance
with generally accepted accounting principles for an operating company and do
not reflect inception to date information.

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 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.

-7-

---

Impairment of Long-Lived Assets

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. The fair value of geothermal property is primarily evaluated
based upon the present value of expected cash flows directly associated with
those assets. An impairment loss would be recognized if the carrying amount of a
capitalized asset is not recoverable and exceeds its fair value. 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 November
28, 2008.

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 EITF 01-08, "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 SFAS 13, "Accounting for Leases".

Property, Plant and Equipment

Costs of acquisition of geothermal properties are capitalized
on an area-of-interest basis. If an area of interest 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               
|Power plant, buildings and improvements      | 15 to 30        
|Wells                                        | 30              
|Well pumps and components                    | 5 to 15         
|Pipelines                                    | 30              
|Transmission lines                           | 30              

-8-

---

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
(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 south eastern Idaho. Over 99% of the accounts receivable
balance at fiscal year end represented a balance due from one major
customer.

NOTE 3 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are detailed as follows:

|                                              |   | Balance      |   |   | Balance      |  
|--------------------------------------------- | - | ------------ | - | - | ------------ | -
|                                              |   | November 28, |   |   | November 30, |  
|                                              |   | 2008         |   |   | 2007         |  
|                                              |   |              |   |   |              |  
|Furniture and
      equipment                 | $ | 73,431       |   | $ | 54,005       |  
|Power plant, buildings and
      improvements |   | 26,120,756   |   |   | -            |  
|Wells                                         |   | 15,339,317   |   |   | -            |  
|Well pumps                                    |   | 2,715,806    |   |   | -            |  
|Pipelines                                     |   | 5,553,048    |   |   | -            |  
|Transmission lines                            |   | 1,517,849    |   |   | -            |  
|                                              |   | 51,320,207   |   |   | 54,005       |  
|                                              |   |              |   |   |              |  
|Less: accumulated depreciation                |   | (1,724,751   | ) |   | (9,780       | )
|                                              |   | 49,595,456   |   |   | 44,225       |  
|                                              |   |              |   |   |              |  
|Construction in progress                      |   | 421,323      |   |   | 50,011,450   |  
|                                              | $ | 50,016,779   |   | $ | 50,055,675   |  

The majority of construction in progress costs, at November 30,
2007, were transferred to property, plant and equipment on January 3, 2008, when
the power plant became operational. At November 28, 2008, construction in
progress consisted of costs incurred for a reverse osmosis unit that was placed
into operations in December 2008.

-9-

---

NOTE 4 - RELATED PARTY TRANSACTIONS

The amounts payable to U.S. Geothermal Inc. and U.S. Geothermal
Services, LLC as of November 28, 2008 and November 30, 2007, were $161,858 and
$55,073; respectively. The amounts payable are unsecured and due on demand. U.S.
Geothermal Inc. is the managing member of the Company. U.S. Geothermal Services,
LLC is a wholly owned subsidiary of U.S. Geothermal Inc.

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

|                                       |   | For the Year   |  |   | For the Year   |  |   | For the Year   | 
|-------------------------------------- | - | -------------- |  | - | -------------- |  | - | -------------- | 
|                                       |   | Ended November |  |   | Ended November |  |   | Ended November | 
|                                       |   | 28, 2008       |  |   | 30, 2007       |  |   | 24, 2006       | 
|                                       |   |                |  |   |                |  |   |                | 
|Capital expenditures                   | $ | 87,510         |  | $ | 965,546        |  | $ | 266,669        | 
|                                       |   |                |  |   |                |  |   |                | 
|Office and
      administration        |   | 31,298         |  |   | 97,559         |  |   | 19,787         | 
|Travel and promotion                   |   | 22,879         |  |   | -              |  |   | -              | 
|Management and
      professional fees |   | 291,925        |  |   | -              |  |   | -              | 
|Plant and well field                   |   | 1,000,351      |  |   | -              |  |   | -              | 
|Salaries and related
      costs       |   | 616,205        |  |   | 171,202        |  |   | 76,276         | 
|Lease, rent and royalties              |   | 163,219        |  |   | -              |  |   | -              | 
|Utilities                              |   | 7,383          |  |   | -              |  |   | -              | 
|Bank charges, Ormat letter of credit   |   | -              |  |   | 83,486         |  |   | 12,451         | 
|                                       | $ | 2,220,770      |  | $ | 1,317,793      |  | $ | 378,183        | 

Management Services Agreement

The Company has entered into a management services agreement
with U.S. Geothermal Services, LLC 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 August 9, 2028. The quarterly
management fee starts at $62,500, and in addition there are incentive payments
linked to certain performance targets. During the fiscal year ended November 28,
2008, the Company paid U.S. Geothermal Services, LLC $227,708 for management
services.

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. The initial placed in service date was January 3,
2008, which is the date 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 initial placed in service date. For the fiscal year, the Company incurred an
additional $74,475 for lease costs, of which $6,975 was unpaid at November 28,
2008.

-10-

---

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

For the FiscalYear
      Ended
    Amounts2009
    $ 90,0002010
    90,0002011
    90,0002012
    90,0002013
    90,000Thereafter
    1,170,000Total
    $ 1,620,000


NOTE 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 FiscalYear
      Ended
    *Amounts2009
    $ 117,5782010
    119,4812011
    120,6002012
    120,9362013
    121,287Thereafter
    1,650,436Total
    $ 2,250,318


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

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

Power Purchase Agreement

The Company has signed a twenty year power purchase agreement
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 EITF 01-08 and will be 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 also signed a transmission agreement with
Bonneville Power Administration for transmission of the electricity from this
plant to Idaho Power, and a contract to sell the renewable energy credits for
the first ten years to Holy Cross Energy.

-11-

---

NOTE 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 on the basis of
the ratios of the capital contributions. 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. During the initial years of operations Class A
units will receive a larger allocation of distributions.

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. In the
event that additional financing is required, U.S. Geothermal Inc. is obligated
to provide such financing.

NOTE 7  RECLASSIFICATION OF OPERATING EXPENSES

For reporting purposes, the Company has reclassified, expanded
and consolidated certain operating cost line items as originally reported for
the fiscal years ended November 30, 2007 and November 24, 2006 to improve
comparability with the operating results for the fiscal year ended November 28,
2008. The changes did not affect the net operating loss reported in the fiscal
years ended November 30, 2007 and November 24, 2006. The primary purpose of the
change originated with the Companys change in status from a development stage
company to an operational entity. The following table summarizes the changes:

|                                 |   | Originally Reported |  |   |                      | 
|-------------------------------- | - | ------------------- |  | - | -------------------- | 
|                                 |   | for the Year        |  |   | Reclassified for the | 
|                                 |   | Ended November      |  |   | Year Ended           | 
|                                 |   | 30, 2007            |  |   | November 30, 2007    | 
|                                 |   |                     |  |   |                      | 
|Operating Expenses:              |   |                     |  |   |                      | 
|Insurance                        | $ | 17,858              |  | $ | 17,858               | 
|Office and administration        |   | 119,231             |  |   | 58,424               | 
|Travel and
      promotion       |   | 33,774              |  |   | 33,774               | 
|Professional and management fees |   | 458,489             |  |   | 458,489              | 
|Plant and
      well field       |   | 201,865             |  |   | 193,041              | 
|Salaries and related costs       |   | 171,202             |  |   | 171,202              | 
|Lease, rent
      and royalties  |   | -                   |  |   | 61,265               | 
|Utilities                        |   | -                   |  |   | 24,450               | 
|Depreciation                     |   | -                   |  |   | 7,855                | 
|Interest and bank charges        |   | 400                 |  |   | -                    | 
|Miscellaneous
      expense      |   | 23,539              |  |   | -                    | 
|Total
      operating expenses   | $ | 1,026,358           |  | $ | 1,026,358            | 

-12-

---

|                                 |   | Originally Reported |  |   | Reclassified for the | 
|-------------------------------- | - | ------------------- |  | - | -------------------- | 
|                                 |   | for the Year Ended  |  |   | Year Ended           | 
|                                 |   | November 24, 2006   |  |   | November 24, 2006    | 
|                                 |   |                     |  |   |                      | 
|Operating Expenses:              |   |                     |  |   |                      | 
|Insurance                        | $ | 9,514               |  | $ | 9,514                | 
|Office and administration        |   | 51,552              |  |   | 100,430              | 
|Travel and promotion             |   | 27,868              |  |   | 27,868               | 
|Professional and management fees |   | 10,971              |  |   | 10,971               | 
|Plant and well field             |   | 17,820              |  |   | 17,820               | 
|Salaries and related costs       |   | 79,276              |  |   | 79,276               | 
|Interest and bank charges        |   | 44,363              |  |   | -                    | 
|Miscellaneous expense            |   | 4,515               |  |   | -                    | 
|Total operating expenses         | $ | 245,879             |  | $ | 245,879              | 

NOTE 8  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.

-13-

---