UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-K

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934 
For the fiscal year ended March 31, 2009

Or

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES ACT OF 1934 
For the transition period from ______ to ______

Commission File Number **333-117287**

U.S. GEOTHERMAL INC.(Exact name of Registrant as specified in its charter)

|Delaware                                 | 84-1472231         
|---------------------------------------- | -------------------
|(State or Other Jurisdiction of          | (I.R.S. Employer   
|Incorporation or Organization)           | Identification No.)
|                                         |                    
|1505 Tyrell Lane                         |                    
|Boise, Idaho                             | 83706              
|(Address of Principal Executive Offices) | (Zip Code)         

Registrants Telephone Number, Including Area Code
208-424-1027

Securities registered under Section 12(b) of the Exchange Act:

|Title of Each Class            | Name of Each Exchange on Which Registered
|------------------------------ | -----------------------------------------
|Common Stock, $0.001 par value | NYSE Amex                                

Securities registered pursuant to Section 12(g) of the Act:
NONE

Indicate by check mark if the registrant is well-known seasoned
issuer, as defined in Rule 405 of the Securities Act

 £


Yes  QNo

Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act. 
£Yes  

QNo

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Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or  for such shorter
period that the registrant was required to file such reports), and (2) has been  subject to such filing requirements for at least the past 90 days. 
Q


Yes £No

Indicate by check mark whether the
registrant has submitted electronically and posted on its corporate Website, if
any, every Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulations S-T (§229.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit
and post such files).

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrants
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. 

Q

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

|Large accelerated filer [   ]                                                            | Accelerated
      filer                  
      [X]
|---------------------------------------------------------------------------------------- | ---------------------------------------------------
|Non-accelerated filer   [   ]

 
    (Do not check if a smaller reporting
      company) | Smaller reporting company [   ]                    

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Act).  


£Yes  

QNo

The aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which
the common equity was sold, or the average bid and asked price of such
common equity, as of June 8, 2009: $110,420,310

Number of shares outstanding of each of the issuers classes of
common equity, as of the latest practicable date.

|Class of Equity         | Shares Outstanding as of June 8, 2009
|----------------------- | -------------------------------------
|Common stock, par value | 62,033,882                           
|$ 0.001 per share       |                                      

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|U.S. Geothermal Inc. and
      Subsidiaries
|-------------------------------------------
|Form 10-K                                  
|INDEX                                      
|For the Year Ended March 31, 2009          
|                                           
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|PART I                                     
|Item 1                                     
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|Item 1A                                    
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|Item 2                                     
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|Item 3                                     
|Item 4                                     
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|PART II                                    
|Item 5                                     
|Item 6                                     

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|U.S. Geothermal Inc. and
      Subsidiaries
|-------------------------------------------
|Form 10-K                                  
|INDEX                                      
|For the Year Ended March 31,
      2009    
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|PART III                                   
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|PART IV                                    
|Item                                       

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PART I

ITEM 1. DESCRIPTION OF BUSINESS

This report contains forward-looking statements, including, but
not limited to, our statements on strategy, operating forecasts, and our working
capital requirements and availability. In addition, from time to time, the
company or its representatives have made or may make forward-looking statements,
orally or in writing. Such forward-looking statements may be included in, but
are not limited to, various filings made by the company with the Securities and
Exchange Commission (the SEC), press releases or oral statements made by or
with the approval of an authorized executive officer of the company.
Forward-looking statements consist of any statement other than a recitation of
historical fact and can be identified by the use of forward-looking terminology
such as may, expect, anticipate, estimate, or continue or the negative
thereof or other variations thereon or comparable terminology. Actual results
could differ materially from those projected or suggested in any forward-looking
statements as a result of a wide variety of factors and conditions, including,
but not limited to, the factors and conditions described in the discussions of
Risk Factors and Managements Plan of Operations in this report and in other
documents the company files from time to time with the Securities and Exchange
Commission. The reader is cautioned that the Company does not have a policy of
updating or revising forward-looking statements and thus the reader should not
assume that silence by management of the Company over time means that actual
events are bearing out as estimated in such forward-looking statements.

All references to dollars or $ are to United States dollars
and all references to CDN$ are to Canadian dollars.

U.S. Geothermal Inc. (the Company, GTH or we or us or
words of similar import) is in the renewable green energy business. Through
its subsidiary, U.S. Geothermal Inc., an Idaho corporation (Geo-Idaho,
although our references to the Company include and refer to our operations
through Geo-Idaho), we are engaged in the acquisition, development and
utilization of geothermal resources in the Western Region of the United States
of America. Geothermal energy is the natural heat energy stored within the
earths crust. In some areas of the earth, economic concentrations of heat
energy result from a combination of geological conditions that allow water to
penetrate into hot rocks at depth, become heated, and then circulate to a near
surface environment. In these settings, commercially viable extraction of the
geothermal energy and its conversion to electricity become possible and a
geothermal resource is present.

Development of BusinessHistory

Geo-Idaho was formed as an Idaho corporation in February 2002
to conduct geothermal resource development. On March 5, 2002 Geo-Idaho entered
into a letter agreement with the previous owner, pursuant to which Geo-Idaho
agreed to acquire all of the real property, personal property
and permits that comprised the owners interest in the Raft River project located in southeastern Idaho.

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The Company and Geo-Idaho entered into a merger agreement on February 28, 2002, which was amended and restated on November 30, 2003, and closed on December 19, 2003. In accordance with the merger agreement, GTH acquired Geo-Idaho through the merger
of Geo-Idaho with a subsidiary, EverGreen Power Inc., an Idaho corporation formed for that purpose. Geo-Idaho is the surviving corporation and the subsidiary through which GTH conducts operations. As part of this acquisition, we changed our name to
U.S. Geothermal Inc. Because the former Geo-Idaho shareholders became the majority holders of GTH, the transaction is treated as a reverse takeover for accounting purposes.

We currently operate two power plants that include, Raft River Unit I in Idaho (through our joint venture with Raft River I Holdings, LLC, a subsidiary of Goldman Sachs) and a plant located in the San Emidio Desert in Nevada. We also have several
other properties under development or exploration.  Raft River Unit I commenced commercial operations on January 3, 2008.  Raft River Unit I is currently selling between 9.6 and 11.7 megawatts of power to Idaho Power Company under a net 13 megawatt
power purchase agreement (PPA) which expires in 2032. Management is currently evaluating alternatives to bring the Raft River Unit I plant operations to its nameplate capacity of 13 megawatts.

In May 2008, we acquired the geothermal assets, including a 3.6 net megawatt nameplate generating capacity power plant, from Empire Geothermal Power LLC and Michael B. Stewart, located in Washoe County, Nevada for approximately $16.6 million.
The plant currently generates an approximate average net output of 2.5 megawatts, which is sold to Sierra Pacific Power Corporation. With the recent downturn in the economy we have been focusing our efforts on maximizing the available leverage to
our existing equity investments and pursuing a development plan with lower risks by avoidance of exploration drilling of production wells. As a result we are planning a repower facility at San Emidio which will use the existing
geothermal fluid feeding the existing plant to feed a new plant. The plant size is estimated to be 9.4 megawatt and currently is expected to be on line in mid 2011. This plan replaces our original intention to begin development drilling and planning
related to the construction of a 27 megawatt facility utilizing twin 13.5 megawatt plants, similar to the 13 megawatt plant at Raft River Unit I, near the existing San Emidio geothermal plant in the third calendar quarter of 2008.  When construction
of the repower facility is complete, the existing 3.6 megawatt plant may be decommissioned.

Plan of Operations

Our management examines different factors when assessing potential acquisitions or projects at different stages of development, such as the internal rate of return of the investment, technical and geological matters and other relevant business
considerations. We evaluate our operating projects based on revenues and expenses, and our projects under development, based on costs attributable to each project.

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We have additional exploration and development properties, Raft River Units II and III in Idaho, Neal Hot Springs in Oregon, potential additional development at San Emidio and energy rights within the Gerlach Known Geothermal Resource Area in
Nevada, which we recently entered.

Our business strategy is to identify, evaluate, acquire, develop and operate geothermal assets and resources economically, safely and efficiently.  We intend to execute this strategy in several steps outlined below:

- Leverage Management Team Capabilities and Experience Our strategy is focused on the identification and acquisition of resources that can be developed in a cost-effective manner to produce attractive returns. In particular, we seek to
acquire projects that have already undergone geothermal resource discovery. In addition, we intend to operate and manage construction of the projects, while using internal personnel and third-party contractors to efficiently and cost-effectively
develop those resources. We believe that we have the strategic personnel in place to determine which resources provide the greatest opportunity for efficient development and operation. We have developed relationships and employed personnel that will
allow us to develop and utilize geothermal resources as efficiently as possible.
- Develop Our Pipeline of Quality Projects Our project pipeline currently consists of several projects that we believe are aligned with our growth strategy. These projects have consulting reports from various industry experts supporting
our belief in those projects potential, and we have started PPA negotiations for power off-take with counterparties for some of these growth opportunities. If realized, our identified project pipeline will greatly expand our renewable power
generation capacity.
- Utilize Production Tax Credits, Investment Tax Credits and Other Incentives Although geothermal power production can be cost competitive with fossil fuel power generating facilities without government subsidies in some cases,
production tax credits (PTC) available to geothermal power producers enhance the project economics and attract capital investment. For the Raft River Unit I project, we partnered with Goldman Sachs in order to fully utilize production
tax credits available to the joint venture. Our strategy going forward is to structure project ownership to be the primary beneficiary of project economics. Recent legislation enacted as part of the stimulus funding has provided an election to take
30% investment tax credit (ITC) in lieu of the PTC for certain qualified investments being initiated before the end of 2010 and being placed in service before the end of 2014. This ITC election may be available to us at our San Emidio
repower and Neal Hot Springs projects.
- Pursue Acquisition Strategy The geothermal market, particularly in the United States, is fragmented and characterized by a few large players and a number of smaller ones. Geothermal exploration and development is costly, technically
challenging and requires long lead times before a project will produce revenue. We believe that geothermal technical and managerial talent is limited in the industry and that access to capital to develop projects will not be equally available to all
participants. As a result, we believe that there will be opportunities in the future to pursue acquisitions of geothermal projects and/or geothermal development companies with attractive project pipelines.
- Evaluate Other Potential Revenue Streams from Geothermal Resources In addition to electricity generation, we will evaluate additional applications for our geothermal resources including industrial, agriculture, and aquaculture
purposes. These uses generally constitute lower temperature applications where, after driving a turbine generator, residual hot water can be cycled for secondary processes before being returned to the geothermal reservoir by injection wells, which
can provide incremental revenue streams. We will evaluate the optimal use for each geothermal resource and determine whether selling heat for industrial purposes or generating and subsequently selling power to a grid will generate the highest return
on the asset.

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Cash Requirements

We believe our cash and liquid investments at March 31, 2009 are adequate to fund our general operating activities through March 31, 2010. Additional funding will be needed to finance the expansion of production volumes at Raft River, Idaho and the
development of the San Emidio, Nevada and Neal Hot Springs, Oregon projects. We anticipate that the additional funding may be raised through the issuance of shares and/or through the sale of ownership interest in tax credits and equity benefits.

The current financial credit crisis is not anticipated to impact the ability of our customers, Idaho Power Company and Sierra Pacific Power, to pay for their power.  This power is sold under long-term contracts at fixed prices to large utilities.
Projections for 2009 indicate that both projects, Raft River and San Emidio, will generate positive cash flows to the Company. However, the current status of the credit and equity markets could delay our project development activities while the
Company seeks to obtain economic credit terms or a favorable equity market price to further the drilling and construction activities. The Company continues discussions with potential investors to evaluate alternatives for funding at the corporate
and project levels. We are also pursuing available DOE loan guarantees in order to reduce interest costs for any debt instruments the Company may require. At the current market price for the Companys stock, we do not anticipate that additional
funding will result from the exercise of current stock options or warrants.

In these difficult times, the Company has also implemented procedures to conserve cash, reduce costs and maximize revenue.  At the corporate level, we have suspended drilling activities, cancelled non-essential consulting contracts and are reducing
all non-critical expenditures. At the project level, Raft River and San Emidio are increasing efforts to reduce operating costs and will continue to find additional cost savings.  The Company has instituted a wage and salary freeze for all employees
effective January 1, 2009. The wage and salary freeze means that we will not be granting merit pay increases until economic conditions improve and we are able to finance the Company in the equity markets.  In addition, the Company has required that
employees contribute a share of the medical insurance premiums for dependent coverage. The Company will continue to pay 100% of the insurance premiums for the employees.

-8-

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Material Acquisitions/Development

San Emidio and Granite Creek  (Nevada)

We have acquired the geothermal assets of Empire Geothermal Power, LLC and Michael B. Stewart (Empire Acquisition) for approximately $16.6 million. This purchase was completed on May 1, 2008.  The transaction included an operational
geothermal power plant with production and injection wells and a transmission line, ground water rights, and geothermal energy rights to properties in two locations: the San Emidio and the Granite Creek assets. The San Emidio assets are located in
the San Emidio Desert, Washoe County, Nevada and include the geothermal power plant project, approximately 22,944 acres (35.9 square miles) of geothermal leases, and associated ground water rights used for cooling water. The Granite Creek assets are
comprised of approximately 5,414 acres (8.5 square miles) of BLM geothermal leases located approximately 6 miles north of Gerlach, Nevada along a geologic structure known to host geothermal features including the Great Boiling Spring and the Fly
Ranch Geyser.  This plant is our second operating geothermal power plant and is owned by a subsidiary of U.S. Geothermal Inc. The power plant sells an annual average of approximately 2.5 megawatts. The plant is approximately 21 years old and employs
four binary cycle units. We have conducted a review of the information regarding the project, and we believe that the existing production wells can provide 4,500 to 5,000 gallons per minute of 290 to 300°F fluid to the current power plant. We
believe this flow rate and temperature has the potential to generate approximately 10 megawatts using a modern binary cycle power plant.

An independent resource assessment report prepared by Black Mountain Technology in 2008 shows a potential for 44 megawatts of power generation per year for over 30 years. Based on the known 21 year historical production data from this reservoir we
believe that the resource can be significantly expanded with the addition of a number of new production and injection wells. The resource is shallow relative to other properties under development by us, which we believe will allow us to utilize this
property economically.

The San Emidio plant sells its output to Sierra Pacific Power Corporation pursuant to a power purchase agreement (PPA).  We have suspended pursuit of a development plan for the San Emidio geothermal resource area for the production of 27
megawatts of power generation due to the current economic slowdown and potential lack of access of capital on terms favorable to the Company. The current plan calls for the construction of a single 9 megawatt plant, similar to the 13 megawatt plant
at Raft River Unit I. We expect the existing well field will be able to provide 100% of the plants fuel requirements. We expect to revive the original 27 megawatt plan in the future based on acceptable funding arrangements and will plan to begin
drilling a new well field at that time.

Management is currently reviewing alternatives and believes project financing will be available for the 9 megawatt repower development and construction.  The method of financing the construction of the new power plant has not yet been determined. We
believe the construction cost of the project will be approximately $26 to $28 million.

Neal Hot Springs  (Oregon)

Neal Hot Springs is a promising geothermal resource located in Eastern Oregon. We acquired the Neal Hot Springs geothermal energy and surface rights in September 2006. The Neal Hot
Springs resource is currently under development and no construction decision has been made at this time. Drilling of the first well has been completed. We are currently seeking permits to drill two additional production wells and one injection well.
 Drilling on the first production well began in April 2008 and was completed in June 2008. The productivity status of the well has been determined by Richard Holt, an independent reservoir engineer, who has calculated the well to be a highly
productive single well with a potential to deliver 7.3 MW of power net. As part of our current development plan we expect to drill the two additional production wells and one injection well before being able to confirm the reservoir capacity.

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To date, a total of approximately $2.3 million has been expended on the Neal Hot Springs project.  We expect additional expenditures of approximately $5 to $6 million to complete drilling of the planned three additional wells and
associated flow testing.

While a geothermal resource discovery has been verified, a commercial geothermal reservoir has not yet been proven to exist at Neal Hot Springs.  Teplow Geologic performed a preliminary assessment of Neal Hot Springs based on data prepared by
Chevron Minerals from drill records from the late 1970s. Teplow concluded that a potential commercially viable geothermal resource exists and recommended a geophysical and geological mapping program. The mapping and geophysical program was completed
by Teplow and MWH Geo-Surveys Inc. in February 2007. The geophysical program included use of gravimetric and magnetic mapping to produce a subsurface map of the areas faults and irregularities.  Additionally, water samples from the surface hot
springs were analyzed by Thermochem, Inc., and a geothermometer (a chemical based estimate of resource temperature) was calculated which estimated the potential production temperature at 311oF to 347oF.

We have prepared a development plan for the Neal Hot Springs geothermal resource area for the target production of 22 megawatts of net power generation. The plan calls for the construction of three modular units each with a 7.33 megawatt capacity.
The technology employed in the plant will be different from our Raft River Energy Unit I plant in that the binary cycle will be a supercritical cycle using R134 a refrigerant as the working a fluid. The technology is similar to a refrigeration cycle
operating in reverse.

Drilling of the first well was completed in June 2008.  This well is located adjacent to the discovery well drilled by Chevron Resources in l979. We have applied for the necessary permits for three more drilling locations that include two more
production wells and one injection well. Based on our current understanding of the energy potential at the Neal Hot Springs discovery, we expect that 3 to 4 production and 4 to 5 injection wells with an average depth of about 2,500 to 4,000 feet
will be required for the 22 megawatt development. The total drill program for all 7 to 9 wells is expected to take 17 months. Our current plan, assuming successful drilling, finalizing a PPA, signing an EPC contract, and closing of project finance
activities, it is possible to start construction by the fourth quarter of 2009 and be online in late 2011.  We believe the construction cost of the project, including full financing and other related costs, will be approximately $106 million.

The Company has been selected by the U.S. Department of Energy (DOE) to enter into due diligence review on an $85 million project loan for the Neal Hot Springs project located in eastern Oregon.  If awarded, the loan is expected to
provide 80% of the $106 million estimated total
capital cost.  The new plant, designed to deliver 22 megawatts of power net to the grid, is scheduled to begin commercial operations in late 2011.

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We plan to seek additional PPAs for future phases, which would involve drilling new wells and determining the production capacity of those wells for additional plant construction. At this time it is not possible to estimate if or when future wells
will be drilled. Future phases may involve additional PPAs with Idaho Power Company or other utilities in the service area and may or may not include terms similar to other PPAs.

Gerlach  (Nevada)

The Company purchased the right to a 1,252 acre Bureau of Land Management (BLM) geothermal lease for $300,000 in October of 2007. In May of 2008, the Company entered into a joint venture agreement with Gerlach Green Energy LLC of
Nevada (GGE). The target of the joint venture is the exploration of the Gerlach geothermal system, which is located in northwestern Nevada, near the town of Gerlach. The joint venture is located near the Companys Granite Creek
leases that were recently acquired as part of the San Emidio geothermal power plant arrangement.

The joint venture agreement establishes a limited liability company named Gerlach Geothermal LLC. The agreement provides the Company with a 60 percent ownership interest in the joint venture through a subsidiary of the Company and provides GGE a 40
percent ownership interest in the joint venture. The Company is required to expend $2,000,000 toward the joint venture, of which $300,000 has already been made by a property contribution of the 1,252 acre BLM geothermal lease. GGE has
contributed to the joint venture one BLM geothermal lease and one private geothermal lease. These leases have all had previous geologic work performed including geophysical studies and drilling. The joint venture agreement provides GGE an option to
maintain its 40 percent ownership interest by making additional capital contributions as required. If GGE elects to dilute to below a 10 percent interest, their ownership position in the joint venture will be converted to a 10 percent net profits
interest. The Company serves as the joint venture manager and will receive a reasonable fee for the services.

The combined joint venture property totals 3,615 acres (5.6 square miles) with 3,415 acres of BLM leases and 200 acres in a private property lease that contains the Great Boiling Springs thermal feature. The geothermal system near Gerlach is well
known, with an extensive database from previous studies and exploration drilling and the Company believes the area has significant exploration potential. Gerlach was ranked as the No. 3 top resource in Nevada by the United States Geological Survey
in Circular 726, Assessment of Geothermal Resources of the United States; 1975, and has estimated potential resource temperatures from geochemical analysis of 338o F to 352o F (USGS Circulars 726 and 790).

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|Projects Under Development |  |  |          |  |  |               |  |  |                 |  |  |                             |  | 
|-------------------------- |  |  | -------- |  |  | ------------- |  |  | --------------- |  |  | --------------------------- |  | 
|                           |  |  |          |  |  |               |  |  | Target          |  |  | Projected                   |  | 
|                           |  |  |          |  |  |               |  |  | **Development** |  |  | Commercial                  |  | 
|Project                    |  |  | Location |  |  | **Ownership** |  |  | (MW)            |  |  | **Operation
      Date(2)** |  | 
|San Emidio (Replacement)   |  |  | Nevada   |  |  | 100           |  |  | 9               |  |  | 1st Quarter 2011            |  | 
|Neal Hot Springs           |  |  | Oregon   |  |  | 100           |  |  | 22              |  |  | 3rdQuarter 2011             |  | 
|Raft River (Unit II)       |  |  | Idaho    |  |  | JV            |  |  | 13              |  |  | 2012/2013                   |  | 
|Raft River (Unit III)      |  |  | Idaho    |  |  | 100           |  |  | 13              |  |  | 2013/2014                   |  | 

|Additional Properties |  |  |  |          |  |  |           |  |  |                                   | 
|--------------------- |  |  |  | -------- |  |  | --------- |  |  | --------------------------------- | 
|Project               |  |  |  | Location |  |  | Ownership |  |  | **Target Development
      (MW)** | 
|Gerlach               |  |  |  | Nevada   |  |  | 60%       |  |  | To be
    determined              | 
|Granite Creek         |  |  |  | Nevada   |  |  | 100%      |  |  | To be determined                  | 

|                
|----------------
|                
|Resource Details
|                
|                
|Property        
|Raft River      
|San Emidio      
|Neal Hot Springs

|    |                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------
|(1) | The resource assessment is based on 6.0 square miles. The
      remaining acreage was acquired subsequent to the GeothermEx
  report.
|(2) | Actual production temperatures for existing
  wells.                                                                                 
|(3) | Probable reservoir temperature as measured by Teplow and
      MWH Geo-Surveys Inc with a geothermometer.                            

Employees

At March 31, 2009, the Company had 28 full-time and one part
time employee (11 administrative and project development, and 17 field and plant
operations). The Company continuously considers acquisition opportunities, and
if the Company is successful in making acquisitions, additional management and
administrative staff may be added.

The Company did not experience any labor disputes or labor
stoppages during the current fiscal year.

Principal Products

The principal product is based upon activities related to the
production of electrical power from the utilization of the Companys geothermal
resources. The primary product will be the direct sale of power generated by our
interests in our geothermal power plants. Currently our principal revenues
consist of energy sales, consulting and management fees, and lease income. All
power plants currently being considered and currently under construction are for
sites located in the Western Region of the United States of America.

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Sources and Availability of Raw Materials

Geothermal energy is natural heat energy stored within the Earths crust at economically accessible depth. In some areas of the Earth, economic concentrations of heat energy result from a combination of geological conditions that allow water to
penetrate into hot rocks at depth, become heated, and then circulate to a near surface environment. In these settings, commercially viable extraction of the geothermal energy and its conversion to electricity become possible and a geothermal
resource is present.

There are four major components (or factors) to a geothermal resource:

|1. | Heat source and temperature The economic viability of a geothermal resource is related to the amount of heat generated. The higher the temperature, the more valuable the geothermal resource.              
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                              
|2. | Fluid A geothermal resource is commercially viable only when the system contains water and/or steam as a medium to transfer the heat energy to the surface.                                                 
|   |                                                                                                                                                                                                              
|3. | Permeability The fluid present underground must be able to move. In general, significant porosity and permeability within the rock formation are needed to create a viable reservoir.                       
|   |                                                                                                                                                                                                              
|4. | Depth The cost of development increases with depth, as do resource temperatures. The proximity of the reservoir to the surface is therefore a key factor in the economic valuation of a geothermal resource.

Electrical power is directly produced through the utilization of geothermal resources; however, these resources are not a direct component of the final product.

Raft River Energy Unit I, located in Idaho is a proven geothermal resource, and has a 13 megawatt geothermal power plant in operation.  San Emidio, Nevada is a proven geothermal resource, and has a 3.6 megawatt geothermal plant in operation.  Unless
major geological changes occur that impact the geothermal reservoirs, the condition of the existing resources is expected to remain consistent over time. Each power plant constructed will have an impact on the temperature and pressure of the tapped
reservoir. The extent of this impact and the results of future drilling exploration to determine the actual extent of the reservoir will be a limiting factor on the number of plants that can be constructed at a particular reservoir.

Significant Patents, Licenses, Permits, Etc.

Raft River.Five significant permits are in place for the Raft River project and are necessary for continued operations:

|1. | Geothermal well permits for production and injection wells issued by the Idaho Department of Water Resources.                            
|-- | -----------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                          
|2. | A Conditional Use Permit for the first two power plants was issued by the Cassia County Planning and Zoning Commission on April 21, 2005.

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|3. | The Idaho Department of Environmental Quality issued the Air Quality Permit to Construct on May 26, 2006.
|-- | ---------------------------------------------------------------------------------------------------------
|   |                                                                                                          
|4. | A Wastewater Reuse Permit issued by the Idaho Department of Environmental Quality on February 23, 2007.  

San Emidio.The San Emidio project has five significant permits in place necessary for continued operations:

|1. | Geothermal well permits for production and injection wells issued by the Nevada Division of Minerals.      
|-- | -----------------------------------------------------------------------------------------------------------
|   |                                                                                                            
|2. | A Special Use Permit issued by the Washoe County Board of Commissioners on July 1, 1987.                   
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|3. | An Air Quality Permit to Operate from Washoe County renewed on January 1, 2008.                            
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|4. | A Surface Discharge Permit from Nevada Division of Environmental Protection issued on June 11, 2001.       
|   |                                                                                                            
|5. | An Underground Injection Permit from Nevada Division of Environmental Protection issued on August 18, 2000.

Seasonality of Business

Generally, the Companys operations are not significantly impacted by seasonality factors. The Companys binary geothermal plants can operate more efficiently in cooler temperatures. Cooler temperatures facilitate the cooling process of
the secondary fluid that is used to power the turbines.  Plant drilling and construction activities could be negatively impacted by inclement weather that can occur, primarily, during the winter months.

Industry Practices/Needs for Working Capital

The Company is heavily involved in development operations; therefore high levels of working capital are committed, either directly or indirectly to the construction efforts.  After a plant becomes commercially operational, the needs of working
capital are expected to be low. This assumption is primarily based upon the projected revenues and operational expenses, as well as the actual operating results of the Raft River Unit I for the calendar year ended December 31, 2008. The Company is
expecting to be significantly involved in development activities for the next 5 to 10 years.

Dependence on Few Customers

Ultimately, the market for electrical power is vast; however, the number of entities that can physically, logistically and economically purchase the commodity in large quantities in our area of operations are limited. The Company currently collects
revenues from two major sources that include the Idaho Power Company (through the Companys major subsidiary Raft River Energy Unit I) and Sierra Pacific Power Company. Even at planned levels of operation, it is expected
that the Company and its interests will have a small number of direct customers that may amount to less than 4 or 5.

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Competitive Conditions

Although the market for different forms of energy is large and dominated by very powerful players, we perceive our industrial competition to be independent power producers and in particular those producers who provide green renewable
power. Our definition of green power is electricity derived from a source that does not pollute the air, water or earth. Sources of green power, in addition to geothermal, include wind, solar, biomass and run-of-the river hydroelectric. A number of
states have instituted renewable portfolio standards (RPS) that require utilities to purchase a minimum percentage of their power from renewable sources.  For example, RPS statutes in California and Nevada require 20% renewable. On
November 17, 2008, the Governor of California signed executive order which mandated a RPS of 33% by 2020 which sits in addition to the 20% order.  Acording to the Department of Energys Energy Efficiency and Renewable Energy department,
utilities in 34 states nationwide are providing their customers with the opportunity to purchase green, renewable power through premium pricing programs. As a result, we believe green power is a niche sub-market, in which many power purchasers are
increasing or committing to increase their investments.  Accordingly, the conventional energy producers do not provide direct competition.

In the Pacific Northwest there is currently only one geothermal facility (Raft River Energy Unit I).  There are a number of wind farms, as well as biomass and run-of-the river hydroelectric facilities. However, the Company believes that the
combination of greater reliability and baseload generation from geothermal, access to infrastructure for deliverability, and a low "full life" cost will allow it to successfully compete for long term power purchase agreements.

Factors that can influence the overall market for our product include some of the following:

- number of market participants buying and selling electricity;
- availability and cost of transmission;
- amount of electricity normally available in the market;
- fluctuations in electricity supply due to planned and unplanned outages of competitors generators;
- fluctuations in electricity demand due to weather and other factors;
- cost of fuel used by generators, which could be impacted by efficiency of generation technology and fluctuations in fuel supply;
- environmental regulations that impact us and our competitors;
- availability of production tax credits and other benefits allowed by tax law;
- relative ease or difficulty of developing and constructing new facilities; and
- credit worthiness and risk associated with buyers.

Environmental Compliance

As the Companys design and permitting activities have progressed, it has further refined and clarified the environmental issues for which it will have to demonstrate compliance in the
construction and operation of a geothermal facility at Raft River.  The relevant legislation includes: Clean Air Act, Endangered Species Act, Clean Water Act, Rivers and Harbors Act, National Historic Preservation Act, National Pollutant Discharge
Elimination System, Resource Conservation and Recovery Act, Idaho Solid Waste Facilities Act and the IDAPA Drilling for Geothermal Resource Rules.

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In preparation for project financing, Raft River Unit I Environmental Site Assessment was completed by Kleinfelder on October 21, 2005.  The Unit I assessment identified two underground storage tanks, which have since been removed.

The Raft River project is currently in compliance with all environmental permits and water quality monitoring requirements. The most significant investment in environmental compliance in terms of time and cost was associated with water quality
monitoring which had been required on a weekly basis. The Companys second petition to the Idaho Department of Water Resources (IDWR) to reduce the monitoring obligations was accepted. We anticipate a favorable response from the IDWR. IDWR has
concurred that there is no impact from the Companys operations on adjacent aquifers.

Since operations have been initiated, key environmental reports include:

|1) | Monthly production and injection reports which are filed with the IDWR;                                                                      
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------
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|2) | Quarterly ground water monitoring reports which are filed with IDWR;                                                                         
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|3) | Annual land application and blowdown water quality reports filed with the Idaho Department of Environmental Quality.                         
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|4) | Annual Tier II reporting filed with the Idaho Bureau of Homeland Security, Local Emergency Planning Committee, and the local fire department.

The Raft River project is ideally suited in a rural agricultural area. The nearest full time resident is located over one mile south of the plant.  The nearest part time resident is located approximately one half mile north of the plant.
Additionally, there are no unique plant or animal communities in the area and no unique cultural or environmental constraints.

Financial Information about Geographic Areas

As described in detail in the Property section, the Companys interest in the Raft River Unit I power plant, located in the southeastern part of the State of Idaho, became operational on January 3, 2008.  Similar plants are in the planning
stages at the same location as well as locations in Nevada and Oregon. The Company acquired a 3.6 megawatt geothermal plant and geothermal rights in San Emidio, Nevada. Land acquisitions and rights have been obtained to explore the development and
construction of power plants in the southeastern part of the State of Oregon.

The Companys revenues for the three most recent fiscal years ended March 31, 2009, 2008 and 2007 were $1,796,387, $184,242, and $90,206; respectively.  All of these revenues were attributable to customers in the United States.

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Available Information

We make available, free of charge through our Internet website at http://www.usgeothermal.com, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. Information on our website is not incorporated into this report and is not
a part of this report.

Governmental Approvals and Regulation

U.S. Geothermal Inc. is subject to federal and state regulation in respect of the production, sale and distribution of electricity. Federal legislation includes the Energy Policy Act of 2005, the Federal Power Act, and the Energy Policy Act of 1992.
 GTH is defined as an independent power producer under the rules and regulations of the Federal Energy Regulatory Commission (FERC). As an independent power producer, GTHs operations are supported by the Public Utility Regulatory
Policies Act (PURPA) which encourages alternative energy sources such as geothermal, wind, biomass, solar and cogeneration. The State of Idaho also regulates electricity through the Idaho Public Utility Commission (IPUC).
Regulated utilities have the exclusive right to distribute and sell electricity within their service area. They may purchase electricity in the wholesale market from independent producers like GTH.  The IPUC, has the authority to establish rules and
regulations governing the sale of electricity generated from alternative energy sources. Regulated utilities are required to purchase electricity on an avoided cost basis from renewable energy facilities, or they may acquire purchased power through
bids or negotiated procedures.

On May 8, 2006, GTH submitted proposals to Idaho Power in response to their Request for Proposal for Geothermal Power. GTH was the preferred respondent and entered power purchase contract negotiations with Idaho Power. The Raft River
Unit I Geothermal Power Plant started up under a contract based on avoided costs which limited the output of the plant to 10 average mega watts per month. Through subsequent contract negotiations, GTH reduced the long-term price of power to Idaho
Power, and is now allowed to deliver as much power in any month as the plant is capable of producing, up to a maximum hourly output of approximately 16 mega watts. The annual average output is expected to be on the order of 13 mega watts. This 30
percent increase in plant output would be achieved without major additional power plant capital investment and is expected to decrease the operating cost per kilowatt-hour. Some additional production and injection capacity will have to be developed
in order to meet the output targets.

Because carbon regulation is anticipated to increase the cost of power sourced from coal and because there are limited opportunities to purchase baseload geothermal power, GTH has found that utilities across the Western United States are eager to
discuss PPAs with GTH.

On February 28, 2008, U.S. Geothermal Inc. and Eugene Water and Electric Board (EWEB), from Eugene, Oregon signed a power purchase agreement (PPA) for the planned Unit II power plant at Raft River.  The PPA allows for
variable electrical output up to a maximum of 16 megawatts with a term of 25 years.  The PPA is subject to successful drilling and resource development at Raft River. The power will be delivered to BPAs customer load in Idaho.

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The combined sales from the Idaho Power Raft River Unit I contract and the EWEB Unit II contract is anticipated to be 26 megawatts from two plants. Before the burgeoning interest in geothermal power, the Company had originally planned 30 megawatts
from three plants. The construction of only two larger plants will result in substantial capital and operating cost savings through improved economy of scale.

In addition to the EWEB agreement, the strong regional interest in geothermal power has resulted in numerous utilities inquiring with GTH to purchase the electrical power output of Unit III at Raft River, for the output of the Neal Hot Springs power
plants, and for any expanded output at the companys San Emidio, NV project.  All future plants will be developed under PPAs that do not restrict the output of the project.

GTH will be required to obtain various federal, state and county approvals for construction of future geothermal facilities.  These approvals are issued by entities such as the U.S. Fish and Wildlife Service, U.S. Environmental Protection Agency,
State (NV, OR, ID) Departments of Environmental Quality, Water Resources, State Historic Preservation Offices, the applicable land management agency, and County Commissioners.

For project development in Idaho and Oregon, David Evans & Associates of Boise, Idaho is providing consulting and engineering services for transmission and interconnection issues. Centra Consulting, Inc. of Boise, Idaho has been retained to
assist with State of Idaho air quality and cooling water reuse permitting, and we have retained various environmental engineering firms and regulatory consultants to advise and assist GTH with regard to siting, design and regulatory compliance.

For project development in Nevada, U.S. Geothermal is retaining similar consulting firms to supplement in-house staff.

Environmental Credits

In the past several years, there has been increased demand for energy generated from geothermal resources in the United States as production costs for electricity generated from geothermal resources have become competitive relative to fossil fuel
generation. This is partly due to newly enacted legislative and regulatory incentives, such as production tax credits and state renewable portfolio standards.  State renewable portfolio standards laws require that an increasing percentage of the
electricity supplied by electric utility companies operating in states with such standards will be derived from renewable energy resources until certain pre-established goals are met. We expect increasing demand for energy generated from geothermal
and other renewable resources in the United States as additional states adopt or extend renewable portfolio standards.

As a green power producer, environmental-related credits, such as renewable energy credits or carbon credits, may become available for sale to power companies (to allow them to meet their green power requirements) or to
businesses which produce carbon based pollution.  If available, these credits will belong exclusively to us, and may provide an additional source of revenue.

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We expect the following key incentives to influence our results of operation are:

Production Tax Credits and Investment Tax Credits.  Production tax credits provide project owners with a federal tax credit for the first ten years of plant operation.  At present, unless extended, facilities constructed after December 31,
2012 will not be eligible to use this production tax credit. The federal production tax credit available for geothermal energy in 2009 was 2.1 cents per kilowatt-hour.  For projects under construction before the end of 2010 and online before the end
of 2014, a project can elect to take a 30% investment tax credit in lieu of the PTC. The ITC may be converted into a cash grant within the first 6 months of operation of the plant.

Renewable Energy Credits.  Renewable Energy Certificates, or RECs, are tradable environmental commodities that represent proof that 1 megawatt-hour of electricity was generated from an eligible renewable energy resource.  In states that have
a REC program, a renewable energy provider is credited with one REC for every 1,000 kilowatt-hours or 1 megawatt-hour of electricity it produces. The renewable energy is then fed into the electrical grid and the accompanying REC can then be sold on
the open market providing the renewable energy producer with an additional source of income.

On July 29, 2006, U.S. Geothermal, Inc. signed a $4.6 million renewable energy credits purchase and sales agreement with Holy Cross Energy, a Colorado cooperative electric association. The agreement is capped at 10 megawatts.  Holy Cross Energy
began purchasing the renewable energy credits associated with the Raft River Unit I power production on October 2007, and is expected to continue purchasing through 2017.  We retain the renewable energy credits associated with power production from
Raft River Unit I after 2017.  We expect to receive a majority of the annual revenue from the ten-year renewable energy credits sales arrangement with Holy Cross Energy.

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ITEM 1A. Risk FactorsGeneral Business Risks

Our future performance depends on our ability to establish that the geothermal resource is economically sustainable.Geothermal resource exploration and development involves a high degree of risk.  The recovery of the amounts shown for
geothermal properties and related deferred costs on our financial statements, as well as the execution of our business plan generally, is dependent upon the existence of economically recoverable and sustainable reserves. Expansion of the production
of power from our interests is not certain and depends on successful drilling and discovery of additional geothermal hydrothermal resources in quantities and containing sufficient heat necessary to economically fuel future plants.

We have a need for substantial additional financing and will have to significantly delay, curtail or cease operations if we are unable to secure such financing.The Company requires substantial additional financing to fund the cost of
continued development of the Neal Hot Springs (Oregon), San Emidio, Gerlach, and Granite Creek Ranch (Nevada) projects. Also, the Company requires funds for other operating activities, and to finance the growth of our business, including the
construction and commissioning of power generation facilities.  We may not be able to obtain the needed funds on terms acceptable to us or at all. Further, if additional funds are raised by issuing equity securities, significant dilution to our
current shareholders may occur and new investors may get rights that are preferential to current shareholders. Alternatively, we may have to bring in joint venture partners to fund further development work, which would result in reducing our
interests in the projects.

We may be unable to obtain the financing we need to pursue our growth strategy in the geothermal power production segment, which may adversely affect our ability to expand our operations.When we identify a geothermal property that we may
seek to acquire or to develop, a substantial capital investment will be required.  Our continued access to capital, through project financing or through a partnership or other arrangements with acceptable terms is necessary for the success of our
growth strategy. Our attempts to secure the necessary capital may not be successful on favorable terms, or at all.

Market conditions and other factors may not permit future project and acquisition financings on terms favorable to us. Our ability to arrange for financing on favorable terms, and the costs of such financing, are dependent on numerous factors,
including general economic and capital market conditions, investor confidence, the continued success of current projects, the credit quality of the projects being financed, the political situation in the state in which the project is located and the
continued existence of tax laws which are conducive to raising capital. If we are unable to secure capital through partnership or other arrangements, we may have to finance the projects using equity financing which will have a dilutive effect on our
common stock. Also, in the absence of favorable financing or other capital options, we may decide not to build new plants or acquire facilities from third parties. Any of these alternatives could have a material adverse effect on our growth
prospects and financial condition.

We may not be able to fully develop the geothermal resource within the Raft River Unit I joint venture boundaries which would increase development costs for Raft River Unit II and result in delays. Raft River Unit II is currently anticipated to be located within the Raft River Unit I joint venture boundaries. Without the agreement and consent of our Raft River Unit I joint-venture partner, Raft River Holdings, we
cannot fully develop the geothermal resource within the Raft River Unit I joint venture boundaries without incurring increased development costs and delays.

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It is very costly to place geothermal resources into commercial production.Before the sale of any power can occur, it will be necessary to construct a gathering and disposal system, a power plant, and a transmission line, and considerable
administrative costs would be incurred, together with the drilling of additional wells. For Raft River Energy Unit I, capital contributions of approximately $52 million were needed. Future expansion of power production at Raft River, Idaho and
San Emidio, Nevada and development of new power production capability at Neal Hot Springs may result in significantly increased capital costs related to increased production and injection well drilling and higher costs for labor and materials.  To
fund expenditures of this magnitude, we may have to find a joint venture participant with substantial financial resources. There can be no assurance that a participant can be found and, if found, it would result in us having to substantially reduce
our interest in the project.

We may be unable to realize our strategy of utilizing the tax and other incentives available for developing geothermal power projects to attract strategic alliance partners, which may adversely affect our ability to complete these projects.Part of our business strategy is to utilize the tax and other incentives available to developers of geothermal power generating plants to attract strategic alliance partners with the capital sufficient to complete these projects. Many of the
incentives available for these projects are new and highly complex.  There can be no assurance that we will be successful in structuring agreements that are attractive to potential strategic alliance partners.  If we are unable to do so, we may be
unable to complete the development of our geothermal power projects and our business could be harmed.

Our participation in the joint venture is subject to risks relating to working with a co-venturer. Raft River Energy I LLC is the Unit I project joint venture company with Raft River I Holdings, LLC, a subsidiary of The Goldman Sachs Group
Inc. Raft River I Holdings, LLC has contributed a total of $34.2 million in cash and we have contributed over $16.4 million in cash and approximately $1.5 million in production and injection wells and geothermal leases to Raft River
Energy I LLC. We are subject to risks in working with a co-venturer that could adversely impact Unit I of the Raft River project as well as anticipated development of Raft River Unit II. We anticipate that the Raft River Unit II power plant may
utilize the geothermal resource within the Raft River Unit I joint venture boundaries. Further, our contribution to the joint venture may exceed returns from the joint venture, if any.

We are a holding company and our revenues depend substantially on the performance of our subsidiaries and the projects they operate.We are a holding company whose primary assets are our ownership of the equity interests in our subsidiaries.
We conduct no other business and, as a result, we depend entirely upon our subsidiaries earnings and cash flow. Our subsidiaries and projects may berestricted in their ability to pay dividends, make distributions or otherwise transfer
funds to us prior to the satisfaction of other obligations, including the payment of operating expenses or debt service.

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We may not be able to manage our growth due to the commencement of operations of the Raft River and San Emidio power plants and exploration activities in Neal Hot Springs which could negatively impact our operations and financial condition.
Significant growth in our operations will place demands on our operational, administrative and financial resources, and the increased scope of our operations will present challenges to us due to increased management time and resources required and
our existing limited staff.  Our future performance and profitability will depend in part on our ability to successfully integrate the operational, financial and administrative functions of Raft River and San Emidio and other acquired properties
into our operations, to hire additional personnel and to implement necessary enhancements to our management systems to respond to changes in our business. There can be no assurance that we will be successful in these efforts. Our inability to manage
the increased scope of operations, to integrate acquired properties, to hire additional personnel or to enhance our management systems could have a material adverse effect on our results of operations.

If we incur material debt to fund our business, we could face significant risks associated with such debt levels.We will need to procure significant additional financing to construct, commission and operate our power plants in order to
generate and sell electricity. If this financing includes the issuance of material amounts of debt, this would expose the Company to risks including, among others, the following:

- a portion of our cash flow from operations would be used for the payment of principal and interest on such indebtedness and would not be available for financing capital expenditures or other purposes;
- a significant level of indebtedness and the covenants governing such indebtedness could limit our flexibility in planning for, or reacting to, changes in our business because certain activities or financing options may be limited or prohibited under
the terms of agreements relating to such indebtedness;
- a significant level of indebtedness may make us more vulnerable to defaults by the purchasers of electricity or in the event of a downturn in our business because of fixed debt service obligations; and
- the terms of agreements may require us to make interest and principal payments and to remain in compliance with stated financial covenants and ratios. If the requirements of such agreements were not satisfied, the lenders could be entitled to
accelerate the payment of all outstanding indebtedness and foreclose on the collateral securing payment of that indebtedness, which would likely include our interest in the project.

In such event, we cannot assure you that we would have sufficient funds available or could obtain the financing required to meet our obligations, including the repayment of outstanding principal and interest on such indebtedness.

We may not be able to successfully integrate companies that we may acquire in the future, which could materially and adversely affect our business, financial condition, future results and cash flow.Our strategy is to continue to expand in
the future, including through acquisitions.  Integrating acquisitions is often costly, and we may not be able to successfully integrate our acquired companies with our existing operations without substantial costs, delays or
other adverse operational or financial consequences.  Integrating our acquired companies involves a number of risks that could materially and adversely affect our business, including:

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- failure of the acquired companies to achieve the results we expect;
- inability to retain key personnel of the acquired companies;
- risks associated with unanticipated events or liabilities; and
- the difficulty of establishing and maintaining uniform standards, controls, procedures and policies, including accounting controls and procedures.

If any of our acquired companies suffers performance problems, the same could adversely affect the reputation of our group of companies and could materially and adversely affect our business, financial condition, future results and cash flow.

The success of our business relies on retaining our key personnel.We are dependent upon the services of our President and Chief Executive Officer, Daniel J. Kunz, our Chief Financial Officer, Kerry D. Hawkley, our Chief Operating Officer,
Douglas J. Glaspey, and Kevin R. Kitz, our Vice President  Project Development.  The loss of any of their services could have a material adverse effect upon us.  As of the date of this report, the Company has executed employment agreements
with these persons, except Mr. Kunz, but does not have key-man insurance on any of them.

Our development activities are inherently very risky.  The high risks involved in the development of a geothermal resource cannot be over-stated. The development of geothermal resources at our Raft River, Idaho; San Emidio, Nevada and Neal
Hot Springs, Oregon projects are such that there cannot be any assurance of success. Exploration costs are high and are not fixed. The geothermal resource cannot be relied upon until substantial development, including drilling, has taken place. The
costs of development drilling are subject to numerous variables such as unforeseen geologic conditions underground which could result in substantial cost overruns.  Drilling for geothermal resource at Raft River is relatively deep with the average
depth of wells some 6,000 feet. Drilling at Neal Hot Springs, Raft River and San Emidio may involve unprofitable efforts, not only from dry wells, but from wells that are productive but do not produce sufficient net revenues to return a profit after
drilling, operating and other costs.

Our drilling operations may be curtailed, delayed or cancelled as a result of numerous factors, many of which are beyond our control, including economic conditions, mechanical problems, title problems, weather conditions, compliance with
governmental requirements and shortages or delays of equipment and services.  If our drilling activities are not successful, we could experience a material adverse effect on our future results of operations and financial condition.

In addition to the substantial risk that wells drilled will not be productive, or may decline in productivity after commencement of production, hazards such as unusual or unexpected geologic formations, pressures, downhole conditions, mechanical
failures, blowouts, cratering, explosions, uncontrollable flows of well fluids, pollution and other physical and environmental risks are inherent in geothermal exploration and production.  These hazards could result in substantial losses to us due
to injury and loss of life, severe damage to and destruction of property and equipment, pollution and other environmental damage and suspension of operations.

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The impact of governmental regulation could adversely affect our business by increasing costs for financing or development of power plants. Our business is subject to certain federal, state and local laws and regulations, including laws and
regulations on taxation, the exploration for and development, production and distribution of electricity, and environmental and safety matters.  On a Federal level, the most important tax rule that affects our business is the Production Tax Credit
(PTC), which was extended to December 31, 2012. Recent legislation enacted as part of the stimulus funding has also provided an election to take 30% investment tax credit in lieu of the PTC for certain qualified investments being
initiated before the end of 2010 and being placed in service before the end of 2014. The loss of the PTC or ITC is a risk that could result in making future expansions at Raft River, San Emidio and at Neal Hot Springs uneconomic. New rules recently
adopted by the Bureau of Land Management, as directed by the Energy Policy Act of 2005, require competitive auction of all geothermal leases on Federal lands.  Competitive leasing is significantly increasing the cost of obtaining leases on Federal
land, is adding to the capital costs needed to develop geothermal projects, is increasing the total electrical power prices needed to make a geothermal project viable and is making it more difficult to acquire additional adjacent lands for reservoir
protection and exploration.

If Federal lands or any Federal involvement are included in any geothermal development, requirements of the National Environmental Policy Act ("NEPA") will be triggered. Most of the geothermal resource in the United States is located in the western
states, where the Federal Government often is the largest landowner.  If a NEPA action is triggered, such as an Environmental Impact Statement or Environmental Assessment, a project delay of one to two years and a cost of $1,000,000 to
$2,000,000 or more may be incurred while the environmental permitting process is completed. NEPA not only can impact the property where the geothermal resource is located, but includes the siting and construction of transmission lines.
Environmental legislation is evolving in a manner that means stricter standards, and enforcement, fines and penalties for non-compliance are more stringent.  Environmental assessments of proposed projects carry a heightened degree of responsibility
for companies and directors, officers and employees. The cost of compliance with changes in governmental regulations has a potential to reduce the profitability of operations.

In the states of Idaho, Nevada and Oregon, drilling for geothermal resources is governed by specific rules. In Nevada drilling operations are governed by the Division of Minerals (Nevada Administrative Code Chapter 534A); in Idaho by the Idaho
Department of Water Resources (IDAPA 37 Title 03 Chapter 04); and in Oregon by the Division of Oil, Gas and Mineral Industries (Division 20 Geothermal Regulation). These rules require drilling permits and govern the spacing of wells, rates of
production, prevention of waste and other matters, and, may not allow or may restrict drilling activity, or may require that a geothermal resource be unitized (shared) with adjoining land owners.  Such laws and regulations may increase the costs of
planning, designing, drilling, installing, operating and abandoning our geothermal wells, the power plant and other facilities.  State environmental requirements and permits, such as the Idaho Department of Environmental Quality, Air Quality Permit
to Construct, include public disclosure and comment. It is possible that a legal protest could be triggered through one of the permitting processes that would delay construction and increase cost for one of our projects. The state of Oregon has an
Energy Facility Siting Council that must issue a site certificate for any geothermal energy facilities of 35 megawatts or higher which could affect the Neal Hot Spring project by adding additional cost and delay construction.

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Because of these state and federal regulations, we could incur liability to governments or third parties for any unlawful discharge of pollutants into the air, soil or water, including responsibility for remediation costs. We could potentially
discharge such materials into the environment:

- from a well or drilling equipment at a drill site;
- leakage of fluids or airborne pollutants from gathering systems, pipelines, power plant and storage tanks;
- damage to geothermal wells resulting from accidents during normal operations; and
- blowouts, cratering and explosions.

Because the requirements imposed by such laws and regulations are frequently changed, we cannot assure you that laws and regulations enacted in the future, including changes to existing laws and regulations, will not adversely affect our business by
increasing cost and the time required to explore and develop geothermal projects. In addition, because the Vulcan Property at Raft River was previously operated by others, we may be liable for environmental damage caused by such former operators.

Industry competition may impede our growth and ability to enter into power purchase agreements on terms favorable to us, or at all, which would negatively impact our revenue. The electrical power generation industry, of which geothermal power
is a sub-component, is highly competitive and we may not be able to compete successfully or grow our business. We compete in areas of pricing, grid access and markets. The industry in the Western United States, in which the Raft River and San Emidio
projects are located, is complex as it is composed of public utility districts, cooperatives and investor-owned power companies.  Many of the participants produce and distribute electricity. Their willingness to purchase electricity from an
independent producer may be based on a number of factors and not solely on pricing and surety of supply. If we cannot enter into power purchase agreements on terms favorable to us, or at all, it would negatively impact our revenue and our decisions
regarding development of additional properties.

Some of our leases will terminate if we do not achieve commercial production during the primary term of the lease, thus requiring us to enter into new leases or secure rights to alternate geothermal resources, none of which may be available on
terms as favorable to us as any such terminated lease, if at all.Most of our geothermal resource leases are for a fixed primary term, and then continue for so long as we achieve commercial production or pursuant to other terms of extension. The
land covered by some of our leases is undeveloped and has not yet achieved commercial production of the geothermal resources.  Leases that cover land which remains undeveloped and does not achieve commercial production and leases that we allow to
expire, will terminate. In the event that a lease is terminated and we determine that we will need that lease once the applicable project is operating, we would need to enter into one or more new leases with the owner(s) of the premises that are the
subject of the terminated lease(s) in order to develop geothermal resources from, or inject geothermal resources into, such premises or secure rights to alternate geothermal resources or lands suitable for injection, all of which may not be possible
or could result in increased cost to us, which could materially and adversely affect our business, financial condition, future results and cash flow.

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Claims have been made that some geothermal plants cause seismic activity and related property damage.  There are approximately two-dozen geothermal plants operating within a fifty-square-mile region in the area of Anderson Springs, in
Northern California, and there is general agreement that the operation of these plants causes a generally low level of seismic activity.  Some residents in the Anderson Springs area have asserted property damage claims against those plant operators.
There are significant issues whether the plant operators are liable, and to date no court has found in favor of such claimants. While we do not believe the areas of the Raft River, Idaho, San Emidio, Nevada and Neal Hot Springs, Oregon will present
the same geological or seismic risks, there can be no assurance that we would not be subject to similar claims and litigation, which may adversely impact our operations and financial condition.

Actual costs of construction or operation of a power plant may exceed estimates used in negotiation of power purchase and power financing agreements.The Companys initial power purchase contract is under rates established by the Idaho
Public Utility Commission, using an avoided-cost model for cost of construction and operating costs of power plants.  If the actual costs of construction or operations exceed the model costs, the Company may not be able to build the
contemplated power plants, or if constructed, may not be able to operate profitably. The Companys financing agreements provide for a priority payback to our partner. If the actual costs of construction or operations exceed the model costs, we
may not be able to operate profitably or receive the planned share of cash flow and proceeds from the project. The actual costs of operating the Raft River power project are higher than the original estimate due to several factors including the need
to filter the ground water for cooling to remove harmful and unanticipated chloride levels in the water, the need to purchase production pump power from a third party to provide maximum plant output, and increased general costs related to labor and
management.

Payments under our initial power purchase agreement may be reduced if we are unable to forecast our production adequately. Under the terms of our initial power purchase agreement, and starting with the third year of operation, if we do not
deliver electricity output within 90% to 110% of our forecasted amount, which requires us to submit a forecast every three months, payments for the amount delivered will be reduced, possibly significantly. For example if the plant produces more than
110% of the power as forecasted then we would not receive any revenue for the amount over the forecast figure.  If the plant produces less than 90% of the forecast amount for unexcused reasons, such as normal plant breakdowns and maintenance, then
we may be subject to a reduced power price, depending on the prevailing power market conditions.  The agreement moves the power price to the market price instead of contracted price. We currently expect to forecast 9 megawatts of delivery on a
10-megawatt plant and the damages would then result if the actual delivery was only 8.1 megawatts or less.  All 8.1 megawatts would be subject to a reduced price that is not possible to predict at this time. The total average revenue per megawatt
hour is approximately $62.40 and the reduction in revenue could be perhaps 30 percent of that amount. As a risk mitigation element, we are not subject to this adjustment until year three of the contract and then we are able to submit a new
forecast every three months thereby limiting this exposure.

There are some risks for which we do not or cannot carry insurance.Because our current operations are limited in scope, the Company carries property, public liability insurance and directors and officers liability coverage, but
does not currently insure against any other risks.

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As its operations progress, the Company will acquire additional coverage consistent with its operational needs, but the Company may become subject to liability for pollution or other hazards against which it cannot insure or cannot insure at
sufficient levels or against which it may elect not to insure because of high premium costs or other reasons. In particular, coverage is not available for environmental liability or earthquake damage.

Our officers and directors may have conflicts of interests arising out of their relationships with other companies.Several of our directors and officers serve (or may agree to serve) as directors or officers of other companies or have
significant shareholdings in other companies. To the extent that such other companies may participate in ventures in which the Company may participate, the directors may have a conflict of interest in negotiating and concluding terms respecting the
extent of such participation. From time to time several companies may participate in the acquisition, exploration and development of natural resource properties thereby allowing for their participation in larger programs, permitting involvement in a
greater number of programs and reducing financial exposure in respect of any one program. It may also occur that a particular company will assign all or a portion of its interest in a particular program to another of these companies due to the
financial position of the company making the assignment.

Failure to comply with regulatory requirements may adversely affect our stock price and business.As a public company, we are subject to numerous governmental and stock exchange requirements, with which we believe we are in compliance. The
Sarbanes-Oxley Act of 2002 and the Securities and Exchange Commission (SEC) have requirements that we may fail to meet by the required deadlines or we may fall out of compliance with, such as the internal controls assessment, reporting and auditor
attestation required under Section 404 of the Sarbanes-Oxley Act of 2002. The Company has documented and tested its internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (SOX).
SOX requires an annual assessment by management of the effectiveness of the Companys internal control over financial reporting and an attestation report by the Companys independent auditors on internal controls over financial reporting.
We may incur additional costs in order to comply with Section 404. In addition, if we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able
to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002.  Moreover, effective internal controls are necessary for us to
produce reliable financial reports and are important to help prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our
reported financial information, and the trading price of our stock could drop significantly. Our failure to meet regulatory requirements and exchange listing standards may result in actions such as the delisting of our stock impacting our
stocks liquidity; SEC enforcement actions; and securities claims and litigation.

Risks Relating To the Market for Our Securities

A significant number of shares of our common stock are eligible for public resale.  If a significant number of shares are resold on the public market, the share price could be reduced and could adversely affect our ability to raise needed
capital. The market price for our common stock could decrease significantly and our ability to raise capital through the
issuance of additional equity could be adversely affected by the availability and resale of such a large number of shares in a short period of time. If we cannot raise additional capital on terms favorable to us, or at all, it may delay our
exploration or development of existing properties or limit our ability to acquire new properties, which would be detrimental to our business.

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Because the public market for shares of our common stock is limited, investors may be unable to resell their shares of common stock.There is currently only a limited public market for our common stock on the Toronto Stock Exchange in Canada
and on the NYSE Amex in the United States, and investors may be unable to resell their shares of common stock.  The development of an active public trading market depends upon the existence of willing buyers and sellers that are able to sell their
shares and market makers that are willing to make a market in the shares.  Under these circumstances, the market bid and ask prices for the shares may be significantly influenced by the decisions of the market makers to buy or sell the shares for
their own account, which may be critical for the establishment and maintenance of a liquid public market in our common stock. We cannot give you any assurance that an active public trading market for the shares will develop or be sustained.

The price of our common stock is volatile, which may cause investment losses for our shareholders.The market for our common stock is highly volatile, having ranged in the last fiscal year ended March 31, 2009, from a low of $0.46 CDN to
a high of $3.02 CDN on the TSX Exchanges and from a low of $0.39 to a high of $2.95 on the NYSE Amex. The trading price of our common stock on the TSX Exchange and on the NYSE Amex is subject to wide fluctuations in response to, among
other things, quarterly variations in operating and financial results, and general economic and market conditions. In addition, statements or changes in opinions, ratings, or earnings estimates made by brokerage firms or industry analysts relating
to our market or relating to our company could result in an immediate and adverse effect on the market price of our common stock. The highly volatile nature of our stock price may cause investment losses for our shareholders.

We do not intend to pay any cash dividends in the foreseeable future.We intend to reinvest any earnings in the development of our projects. Payments of future dividends, if any, will be at the discretion of our board of directors after
taking into account various factors, including our business, operating results and financial condition, current and anticipated cash needs, plans for expansion and any legal or contractual limitations on our ability to pay dividends.

Provisions in our bylaws and under Delaware law could discourage a takeover that stockholders may consider favorable.Our bylaws contain provisions that could depress the trading price of our common stock by acting to discourage, delay or
prevent a change of control of our company or changes in our management that the stockholders of our company may deem advantageous. These provisions prohibit stockholders from calling special meetings, which may deter a takeover attempt.
Additionally, we are subject to Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any holder of 15% or more of our capital stock
for a period of three years following the date on which the stockholder acquired such ownership percentage, unless, among other things, our Board of Directors has approved the transaction. This statute likewise may discourage, delay or prevent a
change of control.

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Item 2. Description of Property

The Company has interests in three areas in the Western United States. These interests include the Raft River area located in southeastern Idaho, the Neal Hot Springs area located in eastern Oregon (near the Idaho/Oregon boarder), and our interests
located in northwestern Nevada. The properties in northwestern Nevada include San Emidio, Gerlach and Granite Creek.  The Company currently has two commercially operational power plants. Unit I at Raft River became commercially operational on
January 3, 2008. The San Emidio plant was acquired in the Empire Acquisition.

REGIONAL LOCATION MAP

Raft River - (Idaho)

The Raft River project, where the companys geothermal operations are located, is in southeastern Idaho, approximately 55 miles southeast of Burley, the county seat of Cassia
County. Burley, population 8,300, is the local agricultural and manufacturing center for the area, providing a full range of light to heavy industrial services.

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A commercial airport is located 90 miles to the northeast in Pocatello, Idaho.  Pocatello, population 53,000, is a regional center for agriculture, heavy industry (mining, phosphate refining), technology and education with Idaho State University.
Malta, a town with a population of approximately 180, is 12 miles north of the project site where basic services, fuel, and groceries are available.  Year-round access to the project from Burley is via Interstate Highway 84 south to State Highway 81
south, then east on the Narrows Canyon Road, an improved county road.

The Raft River project currently consists of ten parcels (generally referred to as the U.S. Geothermal Property, the Crank Lease, the Newbold Lease, the Jensen Investments Leases, the Stewart Lease, the Bighorn Mortgage Lease, the Doman Lease, the
Griffin Lease, and the Glover Lease) comprising 783.93 acres of fee land and 4,736.79 acres of contiguous leased geothermal rights located on private property in Cassia County, Idaho.  All parcels are defined by legal subdivision or by metes and
bounds survey description. The ten parcels are as follows:

The U.S. Geothermal Property - Idaho.The U.S. Geothermal Property is comprised of three separate properties that total 783.93 acres: the Vulcan Property, the Elena Corporation Property and the Dewsnup property. The Vulcan Property includes
both surface and geothermal rights and consists of two parcels. The first parcel has a total area of approximately 240 acres and three geothermal wells (RRGE-1, RRGP-4 and RRGP-5) are located on this parcel. The second parcel has a total area of
approximately 320 acres, and three additional geothermal wells (RRGE-3, RRGI-6 and RRGI-7) are located on this parcel. A fourth well, RRGE-2, although located on the property covered by the Crank lease, was acquired by the company as part of its
purchase of the Vulcan Property.

The Elena Property is comprised of surface and geothermal rights to approximately 100 acres of property, excluding the oil and gas rights to the property. The property is contiguous to other properties owned or leased by the company.

The Dewsnup Property is comprised of the surface and geothermal rights to approximately 123.93 acres of property, excluding the oil and gas rights to the property, but including all surface water rights.  The property is contiguous to other
properties owned or leased by the company.

The Crank Lease.The Crank lease covers approximately 160 acres of mineral and geothermal rights, with right of ingress and egress.

The Newbold Lease.The Newbold lease covers approximately 20 acres of both surface and geothermal rights.

The Jensen Investments Leases.The first Jensen Investments lease covers approximately 2,954.75 acres of geothermal rights only. It is contiguous with the Vulcan Property and property covered by the Crank and Stewart leases.  The second
Jensen Investments lease covers approximately 44.5 acres of surface and
geothermal rights, and is contiguous with property covered by the first Jensen
lease.

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The Stewart Lease.The Stewart Lease covers approximately 317.54 acres on two adjoining parcels. Parcel 1 contains approximately 159.04 acres and includes surface and geothermal rights. Parcel 2 contains approximately 158.50 acres and only
covers surface rights.  The underlying geothermal rights for Parcel 2 are subject to the first Jensen Investments Lease.

The Bighorn Mortgage Lease.The Bighorn Mortgage lease covers approximately 280 acres of surface and geothermal rights.

The Doman Lease.The Doman lease covers approximately 640 acres of surface and geothermal rights, excluding oil and gas rights.

The Griffin Lease.The Griffin lease contains approximately 160 acres of geothermal rights.

The Glover Lease.The Glover lease contains approximately 160 acres of geothermal rights.

BLM Lease.The geothermal resources lease agreement with the United States Department of Interior Bureau of Land Management (BLM) was entered into on August 1, 2007. The lease is for approximately 1,685 acres of land located contiguous to the
Raft River Property in southeastern Idaho.

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Raft River Unit I

Unit I at Raft River became commercially operational on January 3, 2008. As a result of the project financing for Unit I of the Raft River project, the Company has contributed over $17.9 million in cash and property to Raft River Energy I LLC,
the Unit I project joint venture company.  Raft River Holdings, an affiliate of Goldman Sachs Group, has contributed approximately $34 million to the project.  Property assigned to Raft River Energy by the Company includes seven production and
injection wells, seven monitoring wells, the Stewart lease, the Crank lease, the Newbold lease, the Doman lease, and the Glover lease.  All appropriate permits and contracts have also been assigned to Raft River Energy for Unit I.

Although significant detail has been provided about each specific lease area, the economics of the project is based on the total resource. The reservoir supporting the project encompasses the entire Known Geothermal Resource Area (KGRA), which
includes all the property owned or leased by the company at Raft River. All discussions of the economics of the project, including future phases, will be based at the project level rather than at the lease level.

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Lease/Royalty Terms

The Crank lease, the Newbold lease, the Jensen Investments leases, the Bighorn Mortgage lease, the Doman lease, the Griffin lease and the Glover lease have royalties payable under the following terms:

|(a) | Energy produced, saved and used for the generation of electric power, which is then sold by lessee, has a royalty of ten percent (10%) of the net proceeds.    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                
|(b) | Energy produced, saved and sold by lessee, then used by the purchaser for generation of electric power, has a royalty of ten percent (10%) of the market value.
|    |                                                                                                                                                                
|(c) | Energy produced, which is used for any purpose other than the generation of electricity has a royalty of five percent (5%) of the gross proceeds.              

The Stewart lease has production royalties payable under the following terms:

|(a) | Energy produced, saved and sold by the Lessee, then used by the purchaser for generation of electric power, has a royalty of ten percent (10%) of the market value of the electric power.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                          
|(b) | Energy produced, saved and used for the generation of electric power, which is then sold by Lessee, has a royalty of three percent (3%) of the market value of the electric power.       
|    |                                                                                                                                                                                          
|(c) | Energy produced, which is used for any purpose other than the generation of electricity has a royalty of five percent (5%) of the gross proceeds.                                        

No production royalties have been paid to date under any of the leases. All of the leases may be extended indefinitely if production is achieved during the primary term, so long as production is maintained. For each lease other than the Crank Lease
(see below), once production is achieved the amounts due annually will be the greater of the production royalty and the minimum payment for the last year of the primary term.  All payments under the leases are made annually in advance on the
anniversary date of the particular lease. In addition, the following lease and other royalty terms apply to the individual leases:

The Crank Lease.The lease agreement with Janice Crank was originally entered into June 28, 2002, and had a primary term of 5 years. After GTH provided evidence to the lessor that the well (RRGE-2) located on lessors property was not
owned by the lessor (but instead was included in the Vulcan Property), a new lease was entered into on June 28, 2003, which excluded the ownership of RRGE-2, with a four-year initial term.  Advance production royalties (on a June to June basis) are
payable under the Crank lease as follows:

- Year 1 (Paid June 2002 under original lease): $5,000
- Year 2 (Paid June 2003 under original lease): $10,000
- Year 3 (Paid June 2004 under renegotiated lease): $10,000
- Year 4: (Paid June 2005): $10,000
- Year 5: (Paid June 2006): $10,000

Payments for years 2002 through 2006 have been recorded as lease expense. When commercial production is attained, these lease payments can be deducted from future production royalties. For later years, during commercial production, there is a
minimum annual production royalty of $18,000. If the initial commercial production from the well is delayed past the primary lease
term, we will seek an amendment to extend the primary term to the initial commercial plant production date. The minimum amount that will be payable over the course of the leases is $45,000. Maximum amounts payable will depend on production from
the property.

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The Newbold Lease. The company leases this property pursuant to a lease agreement with Jay Newbold dated March 1, 2004.  The Newbold lease has a primary term of 10 years (through February 28, 2014) and is extended indefinitely so long as
production from the geothermal field is maintained. Minimum lease payments are as follows:

- Years 1-5: $10.00 per acre or $200 per year
- Years 6-10: $15.00 per acre or $300 per year

The minimum amount that will be payable over the course of the lease is $2,500. Maximum amounts payable will depend on royalties on production from the property.

The Jensen Investments Leases.The first Jensen Investments lease was originally with Sergene Jensen, as lessor, is dated July 11, 2002, and has a primary term of 10 years. In September 2005, the property subject to the lease was conveyed and
the lease was assumed by Jensen Investments, Inc. Minimum lease payments (on a July to July basis) are as follows:

- Years 1-5: $2.50 per acre or $7,386.88 per year
- Years 6-10: $3.00 per acre or $8,864.25 per year

The minimum amount that will be payable over the course of the lease is $81,256. Maximum amounts payable will depend on production from the property. The second Jensen Investments lease, with Jensen Investments, Inc., is dated July 12,
2002, and has a primary term of 10 years. Minimum lease payments (on a July to July basis) are as follows:

- Years 1-5: $2.50 per acre or $111.25 per year
- Years 6-10: $3.00 per acre or $133.50 per year

The minimum amount that will be payable over the course of the lease is $1,224. Maximum amounts payable will depend on royalties on production from the property.

The Stewart Lease.The Stewart lease, with Reid and Ruth Stewart, is dated December 1, 2004, and has a primary term of 30 years. Minimum lease payments are as follows:

- Year 1: $8,000
- Year 2: $5,000
- Year 3-30: $5,000 plus an annual increase of 5% per year.

The minimum amount that will be payable over the course of the lease is $319,614. Maximum amounts payable will depend upon royalties on production from the property.

The Bighorn Mortgage Lease.  The Bighorn Mortgage lease, with Bighorn Mortgage Corporation, is dated July 5, 2005, and has a primary term of 10 years.  Minimum lease payments are as follows:

- Year 1-5: $1,400
- Year 6-10: $2,100

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The minimum amount that will be payable over the course of the lease is $17,500. Maximum amounts payable will depend upon royalties on production from the property.

The Doman Lease.The Doman lease, with Dale and Ronda Doman, is dated
June 23, 2005, and has a primary term of 10 years. Minimum lease payments are as
follows:

- Year 1-5: $1,600
- Year 6-10: $3,200

The minimum amount that will be payable over the course of the lease is $24,000.
Maximum amounts payable will depend upon royalties on production from the
property.

The Griffin Lease.  The Griffin lease, with Michael and Cleo Griffin, Harlow and Pauline Griffin, Douglas and Margaret Griffin, Terry and Sue Griffin, Vincent and Phyllis Jorgensen, and Alice Mae Griffin Shorts, is dated June 23, 2005, and
has a primary term of 10 years. Minimum lease payments are as follows:

- Year 1: $1,600
- Year 2-5: $800
- Year 6-10: $1,200

The minimum amount that will be payable over the course of the lease is $10,800.
Maximum amounts payable will depend upon royalties on production from the
property.

The Glover Lease.The Glover lease, with Philip Glover, is dated January 25, 2006, and has a primary term of 10 years. Minimum lease payments are as follows:

- Year 1: $2,100
- Year 2-5: $1,600
- Year 6-10: $2,400

The minimum amount that will be payable over the course of the lease is $20,500.
Maximum amounts payable will depend upon royalties on production from the
property.

The total minimum amount payable under all of the leases during their primary terms is $522,393.  The above listed lease payments are payable annually in advance, and are current through lease years beginning in 2005. The leases can be renewed
for extended periods as long as the power plant continues to produce power.

With the construction of the power plant included in Unit I of the Raft River project, management has increased the general liability and umbrella liability insurance coverage, as deemed necessary. Additional builders risk insurance will be obtained
prior to construction of the power plant.

BLM Lease.The lease has a primary term of 10 years. After the primary term, the Company has the right to extend the contract in accordance with regulation 43 CFR subpart 3207. The lease calls for annual payments of $3,502 including
processing fees. BLM has the right to terminate the contract upon written notice if the Company does not comply with the terms of the agreement. The royalty rate is based upon 10% of the value of the resource at the well head.

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The amounts are calculated according to a formula established by Minerals Management Service (MMS).

Neal Hot Springs  (Oregon)

Neal Hot Springs is a promising geothermal resource located in Eastern Oregon. We acquired certain of the Neal Hot Springs geothermal energy and surface rights in September 2006. It is currently under development and no construction decision has
been made at this time.

The first production well was completed in June 2008.  A step-rate flow test, with pressure buildup, was conducted for 12 hours on July 12, 2008 and resulted in a flowing production temperature of 286.5o F (141o C).  The well flowed under
artesian pressure at a peak rate of 2,055 gallons per minute (gpm) at artesian pressure and then was stepped down to a lower flow rate of 1,210 gpm before it was shut in and the pressure buildup monitored. Richard Holt of Geothermal
Science, Inc., an independent geothermal reservoir engineer, calculated a well productivity index of 450 gpm/psi, which is considered to be very high in the geothermal industry. We are currently seeking permits for drilling two additional production
wells and one injection well.



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Lease/Royalty Terms

Cyprus Gold Exploration Corporation.The lease is for
mineral rights for 4,960 acres located in Malheur County, Oregon is dated
January 24, 2007, and has a primary term of 10 years, and expires January 24,
2017. Minimum lease payments are as follows:

Year
    2007
    $6,000Year
    2008-2011
    $4,000Year
    2012-2016
    $8,000


The agreement defines a royalty rate is based upon 2% of the
actual revenue for the first 10 years of commercial production and 3%
thereafter.

JR Land and Livestock.The lease is for mineral rights
for 4,960 acres located in Malheur County, Oregon is dated January 24, 2007, and
has a primary term of 10 years, and expires January 24, 2017. Minimum lease
payments are as follows:

Year
    1
    $15,000Year
    2
    $25,000Year
    3
    $30,000


The agreement defines a royalty rate is based upon 3% of the
gross proceeds for the first 5 years of commercial production, 4% of gross
proceeds for the next 10 years, and 5% of the gross proceeds thereafter.

San Emidio  (Nevada)

Effective May 1, 2008, the Company acquired a 3.6 megawatt
operating geothermal power plant and approximately 28,358 acres (44.3 square
miles) of geothermal energy leases and certain ground water rights all located
north of Reno, Nevada. The total purchase price was $16.6 million. The assets
are comprised of two locations: the San Emidio assets and the Granite Creek
assets. The San Emidio assets are located in the San Emidio Desert, Washoe
County, Nevada and include the geothermal power project, approximately 22,944
acres (35.9 square miles) of geothermal leases, and ground water rights used for
cooling water. The Granite Creek assets are comprised of approximately 5,414
acres (8.5 square miles) of BLM geothermal leases located about 6 miles north of
Gerlach, Nevada along a geologic structure known to host geothermal features
including the Great Boiling Spring and the Fly Ranch Geyser.

The 3.6 -megawatt geothermal power plant has been producing
power since 1987 and sells electricity to Sierra Pacific Power Corporation under
an existing power purchase agreement that extends through 2017. A March 2008
resource assessment of the San Emidio geothermal leases by independent experts
Susan Petty and Dennis Trexler of Black Mountain Technology shows a total
resource potential of 44 megawatts with a 90% probability factor.

The power plant was constructed in 1986 with commercial power
generation beginning in 1987. Deeper wells with higher temperatures were drilled
in 1994 to supply the plant after output declined due to cooling of the
original, shallow production wells. The current configuration of the plant
consists of four 1.2 megawatt Ormat Energy Converters, three injection wells and
four
production wells. A three cell cooling tower was added in 1998 to improve summer power generation. The plant is connected to the transmission grid via a 60 kilovolt intertie.

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San Emidio is our second operating geothermal power plant and is owned by a wholly owned subsidiary of the Company (USG Nevada LLC). The project is a small-scale geothermal power plant selling approximately three megawatts.  The plant is
approximately 22 years old and employs four binary cycle units. We have conducted a review of the information regarding the project, and we believe that the existing production wells can provide 4,000 to 5,000 gallons per minute of 280 to 300 °F
fluid to the current power plant.



Lease/Royalty Terms

BLM Leases.At the closing of the Empire Acquisition, the geothermal leases with the BLM were assigned to the Company. The lease contracts are for approximately 21,905 acres of land and geothermal rights located in the San Emidio Desert,
Nevada.  The lease contracts have primary terms of 10 years. Per federal regulations applicable for the contracts, the lessee has the option to extend the primary lease term another 40 years if the BLM does not need the land for any other purpose
and the lessee is maintaining production at commercial quantities. The leases require the lessee to conduct operations in a manner that minimizes adverse impacts to the environment.

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The terms of the BLM contracts are detailed as follows:

|                   | Current Contract |       |            
|------------------ | ---------------- | ----- | -----------
|Contract
      No. | Expiration Date  | Acres | Annual Rate
|N63004             | 9/30/2013        | 1,280 | $ 1,280    
|N63005             | 9/30/2013        | 1,279 | 1,279      
|N63006             | 9/30/2013        | 1,920 | 1,920      
|N63007             | 9/30/2013        | 1,920 | 1,920      
|N75233             | 11/1/2011        | 1,868 | 3,738      
|N75552             | 11/1/2012        | 2,560 | 2,560      
|N75553             | 11/1/2012        | 1,480 | 1,480      
|N75554             | 11/1/2012        | 2,118 | 2,119      
|N75555             | 11/1/2012        | 960   | 960        
|N75556             | 11/1/2012        | 1,480 | 1,480      
|N75557             | 11/1/2012        | 1,280 | 1,280      
|N75558             | 11/1/2012        | 680   | 680        
|N42707             | Indefinite       | 1,797 | 0          
|N47169             | 12/1/2017        | 3     | 0          
|N74196             | 4/30/2012        | 640   | 640        
|N57437             | 9/30/2013        | 640   | 2,560      

The BLM lease contracts require royalty payments for the use of
geothermal resources. The rate is based upon 10% of the value of the resource at
the well head. The amounts are calculated according to a formula established by
MMS.

Kosmos Lease.This is a geothermal resource lease
agreement for 1,040 acres with The Kosmos Company (Kosmos). The lease has been
in effect since October l987 and continues so long as the lessee is drilling
for, producing geothermal power, or conducting remedial operations. Under the
terms of the first amendment to the lease which became effective upon our
acquisition of the San Emidio Geothermal assets, Kosmos will be paid the greater
of $8,000 per month or 3.5% of the gross sales price of electric power from
fluids produced and injected until the proposed new power plant achieves
commercial operation. When a new power plant is installed and producing
commercial power, the royalty will change to 1.75% of the gross sales price of
electric power sold by the lessee for 120 months and 3.5% thereafter.

Gerlach  (Nevada)

In May 2008, the Company entered into a joint venture agreement
with Gerlach Green Energy LLC of Nevada to form a limited liability company
named Gerlach Geothermal LLC. The joint venture owns geothermal rights for 3,615
acres (5.6 square miles) located in northwestern Nevada near the town of
Gerlach. The target of the joint venture is the exploration of the regional
Gerlach geothermal system. The joint venture is located near the Companys
Granite Creek leases that were recently acquired as part of the San Emidio
geothermal power plant acquisition.

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Lease/Royalty Terms

BLM Leases.The Gerlach Geothermal LLC assets are comprised two BLM geothermal leases and one private lease totaling 3,615 acres. Both BLM leases have a royalty rate is based upon 10% of the value of the resource at the wellhead. The amounts
are calculated according to a formula established by MMS. One of the two BLM leases has a second royalty commitment to a third party of 4% of gross revenue for power generation and 5% for direct use based on BTUs consumed at a set comparable price
of $7.00 per million BTU of natural gas. The private lease has a 10 year primary term and would receive a royalty of 3% gross revenue for the first 10 years and 4% thereafter.

Granite Creek  (Nevada)

The Granite Creek assets are comprised of approximately 5,414 acres (8.5 square miles) of BLM geothermal leases located about 6 miles north of Gerlach, Nevada along a geologic structure known to host geothermal features including the Great Boiling
Spring and the Fly Ranch Geyser.

Lease/Royalty Terms

BLM Leases.The Company has three geothermal lease contracts with the BLM.  The lease contracts are for approximately 5,414 acres of land and geothermal water rights located in the northwestern Nevada.  The lease contracts have primary terms
of 10 years.  Per federal regulations applicable for the contracts, the lessee has the option to extend the primary lease term another 40 years if the BLM does not need the land for any other purpose and the lessee is maintaining production at
commercial quantities. The leases state annual lease payments of $5,414, not including processing fees, and expire October 31, 2012.

Boise Administration Office  (Idaho)

The Company entered into a 3 year lease contract effective January 1, 2008 through January 31, 2011, for general office space for an executive office located in Boise, Idaho.  The lease payments are due in monthly installments that start at
$5,637 per month and increase annually to $5,981 per month.

Item 3. Legal Proceedings

As of May 31, 2009, management is not aware of any material current or pending legal proceedings in which the Company is a party, as plaintiff or defendant, or which involve any of its properties.

Item 4. Submission of Matters to a Vote of Security Holders

None.

-40-

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PART II

Item 5. Market for Registrants Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities

NYSE Amex/Over-The-Counter Bulletin Board

From June 3, 2005 to April 15, 2008, the common stock of U.S.
Geothermal Inc. was quoted on the Over-The-Counter Bulletin Board (the Bulletin
Board) under the trading symbol UGTH. EffectiveApril 14, 2008, thecommon stock of U.S. Geothermal Inc. began trading on the American Stock
Exchange, now the NYSE Amex Equities, under the trade symbol HTM. Future
trading prices of our common shares will depend on many factors, including,
among others, our operating results and the market for similar securities.

The following sets forth information relating to the trading of
our common stock from April 1, 2007.

Bid Prices on the Over-The-Counter Bulletin and NYSE
AmexFiscal Year
      Ended March 31, 2008First Quarter
    2.70
    1.37Second Quarter
    3.10
    1.85Third Quarter
    4.78
    2.56Fourth Quarter
    4.09
    2.07Fiscal Year
      Ended March 31, 2009First Quarter *
    2.95
    2.18Second Quarter
    2.52
    1.51Third Quarter
    1.73
    0.39Fourth Quarter
    1.16
    0.60


* - The Companys common shares began trading on the NYSE Amex
on April 14, 2008.

TSX and TSX Venture Exchange

The Companys common shares began trading on the Toronto Stock
Exchange (TSX) on October 1, 2007, under the symbol GTH. Prior to trading on
the TSX, the Companys common shares were traded on the TSX Venture Exchange
through September 28, 2007 under the same symbol. TSX is the senior equity
market in Canada. TSX Venture Exchange is a segment of the Toronto Stock
Exchange Group that provides the global financial community with access to
Canada's equity capital and energy markets. The TSX Venture Exchange provides
access to capital for companies at the early stages of their growth while
offering investors a well-regulated market for making venture investments. The
following sets forth information relating to the trading on the TSX and TSX
Venture Exchange:

-41-

---

Sales Prices on the TSX and TSX Venture Exchanges
(CDN$)Fiscal Year
      Ended March 31, 2008First Quarter
    2.80
    1.59Second Quarter
    3.19
    1.99Third Quarter *
    4.75
    2.56Fourth Quarter
    4.05
    2.00Fiscal Year Ended March 31, 2009First Quarter
    3.02
    2.28Second Quarter
    2.47
    1.57Third Quarter
    1.84
    0.46Fourth Quarter
    1.40
    0.76


* - The Companys common shares began trading on the TSX on
October 1, 2007, and the Companys common shares ceased trading on the TSX
Venture Exchange on September 28, 2007.

As of May 31, 2009, we had approximately 14,800 stockholders of
record.

The Company has never paid and does not intend to pay dividends
on our common stock in the foreseeable future. Although the Companys articles
of incorporation and by-laws do not preclude payment of dividends, we currently
intend to retain any future earnings for reinvestment in our business. Any
future determination to pay cash dividends will be at the discretion of our
board of directors and will be dependent upon our financial condition, results
of operations, capital requirements and other relevant factors. All of the
common shares are entitled to an equal share in any dividend declared and paid.

Recent Sales of Unregistered Securities

None.

**Item 6. Selected Financial Data**

|                                                 |                 |            |   |   | For the Fiscal Years Ended March 31, |   |   |            |  
|------------------------------------------------ | --------------- | ---------- | - | - | ------------------------------------ | - | - | ---------- | -
|                                                 |                 | 2009       |   |   | 2008                                 |   |   | 2007       |  
|Operating Revenues                               | $               | 1,796,387  |   | $ | 184,242                              |   | $ | 90,206     |  
|Operating Expenses                               |                 | 7,669,046  |   |   | 4,797,105                            |   |   | 3,138,169  |  
|Loss from Continuing Operations                  |                 | (5,872,659 | ) |   | (3,549,186                           | ) |   | (1,942,884 | )
|Loss
      per share from ContinuingOperations   |                 | (0.09      | ) |   | (0.06                                | ) |   | (0.04      | )
|Cash dividends declared and paidper common share |                 | 0          |   |   | 0                                    |   |   | 0          |  
|                                                 | As of March 31,
|                                                 |                 | 2009       |   |   | 2008                                 |   |   | 2007       |  
|                                                 |                 |            |   |   |                                      |   |   |            |  
|Total
      Assets                               | $               | 51,631,870 |   | $ | 40,366,933                           |   | $ | 22,673,340 |  
|Total Long-term Obligations (1)                  |                 | 1,972,200  |   |   | 1,975,672                            |   |   | 2,533,858  |  

-42-

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|(1) | Long-term obligations represent the fair value of stock
      options to be exercised by officers, directors, employees and consultants
      of the Company. These obligations were recorded as a liability since the
      option exercise price was stated in Canadian dollars, subjecting the
      Company and the employee to foreign currency exchange risk in addition to
      the normal market price fluctuation risk.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                 | Loss per share from Continuing Operations | Operating Revenues | Gross
      Profit | Loss from Operations | Net Loss from 
    Continued Operations
|-------------------------------- | ----------------------------------------- | ------------------ | ------------------ | -------------------- | ---------------------------------------
|Fiscal Year Ended March 31, 2007 |                                           |                    |                    |                      |                                        
|1stQuarter                       | $                                         | (0.01              | )                  | $                    | 0                                      
|2ndQuarter                       |                                           | (0.02              | )                  |                      | 206                                    
|3rdQuarter                       |                                           | (0.01              | )                  |                      | 90,000                                 
|4thQuarter                       |                                           | (0.01              | )                  |                      | 0                                      
|Fiscal Year Ended March 31, 2008 |                                           |                    |                    |                      |                                        
|1stQuarter                       |                                           | (0.01              | )                  |                      | 0                                      
|2ndQuarter                       |                                           | (0.02              | )                  |                      | 0                                      
|3rdQuarter                       |                                           | (0.01              | )                  |                      | 0                                      
|4thQuarter                       |                                           | (0.02              | )                  |                      | 184,242                                
|Fiscal Year Ended March 31, 2009 |                                           |                    |                    |                      |                                        
|1stQuarter                       |                                           | (0.03              | )                  |                      | 358,635                                
|2ndQuarter                       |                                           | (0.03              | )                  |                      | 614,383                                
|3rdQuarter                       |                                           | (0.01              | )                  |                      | 424,799                                
|4thQuarter                       |                                           | (0.02              | )                  |                      | 398,570                                

Item 7. Managements Discussion and Analysis of Financial
Condition and Results of Operations

U.S. Geothermal Inc. is a Delaware corporation. The Companys
shares of common stock trade on the TSX under the symbol GTH and on the NYSE
Amex under the trade symbol HTM. On December 19, 2003, the Company acquired
all of the outstanding securities of U.S. Geothermal Inc., an Idaho corporation
(Geo-Idaho) incorporated in February 2002, through a transaction merging
Geo-Idaho into Evergreen Power Inc., a wholly-owned Idaho subsidiary formed for
purposes of the merger transaction. Following the merger, the Company changed
its name from U.S. Cobalt Inc. to U.S. Geothermal Inc. Pursuant to the merger,
Geo-Idaho became the surviving subsidiary of the Company, and Evergreen Power,
Inc. ceased to exist. GTH is still, primarily, a development stage company and
has just started receiving revenues from operating activities.

-43-

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For the fiscal year ended November 31, 2009, the Company is focused on:

|1) | optimizing the operation of the Unit I power plant at the Raft River, Idaho geothermal project (Raft River Unit I);                                     
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                           
|2) | evaluating flow test results from exploration well NHS-1, planning and permitting drilling and field development activities at Neal Hot Springs in Oregon;
|   |                                                                                                                                                           
|3) | identifying potential buyers and negotiating a PPA for the Neal Hot Springs Project;                                                                      
|   |                                                                                                                                                           
|4) | optimizing the operation of the San Emidio (formerly Empire) power plant in Nevada, and planning for repowering the existing plant;                       
|   |                                                                                                                                                           
|5) | drilling one exploration drill hole and permitting for additional exploration drill holes at the San Emidio Project; and                                  
|   |                                                                                                                                                           
|6) | the evaluation of potential new geothermal project acquisitions.                                                                                          

Raft River Unit I achieved commercial operation on January 3, 2008. During 2008, Raft River operated at 95 percent availability and averaged 9.8 megawatts for the year. A reverse osmosis filter system was added to the cooling water system for the
removal of higher than anticipated levels of chloride, which would damage plant equipment.

The Company has assembled a team of seven qualified technicians for the ongoing operation and maintenance of the Unit I power plant and planned future power plant units at Raft River. The team underwent operator training from Ormat and is currently
operating the plant unassisted.

With carbon regulation widely anticipated to increase the cost of power sourced from coal, and limited opportunities to purchase baseload geothermal power, the Company has found that utilities across the Western United States have been eager to
discuss power purchases from the Raft River geothermal resource. As a result of the increased interest, U.S. Geothermal elected to withdraw its Raft River Unit II and Unit III Idaho Power PPAs without submitting them to the Idaho Public Utility
Commission (IPUC) for approval in order to pursue larger capacity PPAs with other utilities. With the concurrence of Idaho Power, the Unit II and Unit III 10 megawatt contracts were voided without further obligation on either party.

On September 26 2007, Idaho Power Company and the Company announced the signing of a new, 13-megawatt, full output power purchase agreement. Idaho Power submitted the new PPA to the IPUC for their final approval, which was granted on January 16,
2008. The new PPA replaces the existing 10 megawatt, 20 year PPA and is part of Idaho Powers 2006 formal request for geothermal electricity under which the Company was named the sole successful bidder in March 2007.

The new PPA is for electricity sales of an annual average of 13-megawatts and has a 25-year term. It is the first contract signed as part of ongoing negotiations with Idaho Power for a total of 45.5 megawatts. Idaho Power and the Company expect to
be able to use this first contract as a template for advancing negotiations for the output from the planned Unit Three at Raft River and 26 megawatts of planned production from the Companys Neal Hot Springs project located in southeast
Oregon.

Eugene Water and Electric Board (EWEB), from Eugene, Oregon and U.S. Geothermal have signed a PPA with EWEB to purchase the full 13 megawatt annual electrical output of Raft River Unit II. With the execution of the EWEB PPA, and the
increase of Unit I under the new Idaho
Power PPA, the total planned output from the Unit I and Unit II Raft River power plants is expected to be 26 megawatts from two plants, instead of the originally planned 30 megawatts from three plants, resulting in substantial capital and operating
cost savings through improved economy of scale. The ongoing negotiations with Idaho Power relating to Raft River Unit III and Neal Hot Springs and the signed EWEB PPA recognize that the PPAs are contingent upon extension of the federal Production
Tax Credit, successful resource drilling and an economically feasible resource discovery at Raft River and Neal Hot Springs.

-44-

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In addition, the strong regional interest in geothermal power has resulted in several utilities from California to Washington entering into discussions with U.S. Geothermal Inc. to purchase the electrical power output of Unit III.  Subject to
drilling confirmation of sufficient geothermal resource, the power plant output from three units at Raft River would be 39 megawatts, instead of the maximum 30 megawatts under the previous Idaho Power PPA provisions.

In May 2008, we acquired the geothermal assets, including a 3.6 net megawatt nameplate generating capacity power plant, from Empire Geothermal Power LLC and Michael B. Stewart, located in Washoe County, Nevada for approximately $16.6 million.
The plant currently generates an approximate average net output of 3.1 megawatts, which is sold to Sierra Pacific Power Corporation.  Subject to the receipt of all required permits, we intend to repower the project using the existing flow rate and
build a new plant with 8 to 10 megawatts of capacity. When construction is complete, the existing 3.6 megawatt plant may be decommissioned. We believe the construction cost of the repower project will be approximately $25 to $26 million.
Management is currently reviewing alternatives and believes project finance will be available for the development and construction. A new PPA for the amount of power above that is covered by the existing NV Energy PPA ( approximately 3 megawatts)
will be required before financing can be completed. The method of financing the construction of the new power plant has not yet been determined.

Factors Affecting Our Results of Operations

Although other factors may impact our operations and financial condition, including many that we do not or cannot foresee, we believe that our results of operations and financial condition for the foreseeable future will be affected by the following
factors.

Raft River LLC

We hold a 50% interest in Raft River LLC, which owns Raft River Energy Unit I. Construction of Raft River Energy Unit I required substantial capital, and partnering with a co-venturer allowed us to share the risks and rewards of ownership. The joint
venture has also allowed us to take advantage of production tax credits which would not otherwise have been available to us. We estimate we will receive cash payments totaling approximately $1.6 million per year from the Raft River Unit I
project for the first four years of its operations from a water lease ($90,000), management fees ($250,000), sales proceeds from renewable energy credits ($160,000) and projected cash distributions available from operations
($100,000).

We managed the construction of the Raft River Energy Unit I plant pursuant to our operating agreement with Raft River LLC. Raft Holdings has contributed to Raft River LLC a total of
approximately $34.2 million in cash and we have contributed $16.4 million in cash and approximately $1.5 million in production and injection wells and geothermal leases through March 31, 2009.

-45-

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Under the terms of the Operating Agreement, Raft River LLC is required to distribute the cash it holds that is not otherwise allocated to its liabilities or reserves to Raft Holding and us at the end of each fiscal quarter.  Raft Holdings is
entitled to specific quarterly cash distributions in amounts outlined in the Operating Agreement. For the first four years after Raft River Unit I was placed into service, and once Raft Holdings has received cash distributions specified in the
Operating Agreement, we are entitled to receive available cash distributions up to a certain specified limit.  Following this period and continuing until Raft Holdings has achieved a specified rate of return, we will receive a de minimis percentage
of the available cash distributions. At such time, we will receive less than half of all available cash distributions until the later of 20 years or the date we have achieve more than 30 megawatts of total net electrical generation capacity from
geothermal resources in the United States under our ownership or control or the economic equivalent thereof.  However, at this time, we will be receiving a majority of the cash flow due to payments made to us as fees and royalties under separate
energy and water rights agreements. Thereafter, we will receive a significant majority of the available cash distributions for the remaining life of the project.

Raft River Unit I is currently selling between 8.5 and 9.5 megawatts of power to Idaho Power Company.  Raft River LLC has also entered into an agreement with Holy Cross Energy of Colorado for the sale of the RECs associated with the Raft River Unit
I power plant. Holy Cross Energy has agreed to pay a price of $7.50 per megawatt hour for the first 10 megawatts of generation on an annual basis. The price for these RECs will decrease annually by $0.50 per megawatt until the contract
terminates in 2017. We also receive revenue from Raft River LLC from water and energy leases.

We use the equity method of accounting to account for the operating results of Raft River LLC over which we have significant influence due to our management of the operations and our participation on the management committee. Under the equity
method, we recognize our proportionate share of the net income (loss) of Raft River LLC in the line item Loss from investment in subsidiary. Once we begin to receive the significant majority of the available cash distributions
from Raft River LLC, we expect that Raft River Unit I will be accounted for as a consolidated entity.

Pursuant to a Management Services Agreement which continues until 2028, we provide operating and management services to Raft River LLC.  We will receive approximately $250,000 per year for the next four year pursuant to this agreement.
Thereafter, modest adjustments to this amount will occur according to an escalator clause in the agreement.

Power Purchase Agreements

Prior to the construction of a geothermal project, we typically enter into a power purchase agreement with a utility, which fixes the price of energy produced at a project for a 20 to 25 year period. Such PPAs are typically negotiated with the
utility company and approved by a state utility commission or similar regulating body.

-46-

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Power purchase agreements generally provide for the payment of energy payments, capacity payments, or both.  Energy payments are calculated based on the amount of electrical energy delivered to the relevant power purchaser at a designated delivery
point. The rates applicable to such payments are either fixed, subject to adjustments in certain cases, or are based on the relevant power purchasers short-run avoided costs calculated as the incremental costs that the power purchaser avoids
by not having to generate such electrical energy itself or purchase it from others. Capacity payments, on the other hand, are generally calculated based on the amount of time that our power plants are available to generate electricity. Some power
purchase agreements provide for bonus payments in the event that the producer is able to exceed certain target levels and forfeiture of payments if minimum target levels are not met.

Raft River Energy I LLC currently earns revenue from a full-output PPA with Idaho Power, which is expected to be 13-megawatts annual average. The PPA expires in 2032. This PPA was signed as part of ongoing negotiations with Idaho Power for PPAs
covering an expected total output of 45.5 megawatts and may be used as the template for additional PPAs. The price of energy sold under the Idaho Power PPA is split into three seasons: power produced during the peak periods of July, August, November
and December will be purchased at 120% of the set price; power produced in the three month low demand season will be purchased at 73.50% of the set price; and power produced in the remaining five months of the year will be purchased at 100% of the
set price. The PPA sets a first year average purchase price of $53.60 per megawatt hour. The $53.60 purchase price is escalated each year at a compound annual rate of 2.1% until year 15. From years 16 to 25 of the contract the escalation
rate will drop to 0.6% per year.

Power generated by San Emidio is sold to Sierra Pacific Power Corp. (NV Energy) pursuant to a 30 year PURPA PPA that terminates in December 2017. The PPA includes energy and capacity payment components, as well as peak and off-peak rates. The
average power price received in 2008 is approximately $77.00 per megawatt hour.  Contract prices are adjusted annually on March 1 based upon the Handy-Whitman price index, total steam production plant category, as specified by Nevada Public
Utility Commission standards for PURPA contracts.

Results of Operations

Fiscal Year Ended March 31, 2009 to March 31, 2008

For the years ended March 31, 2009 and 2008, we incurred net losses of $5,735,747 and $3,549,186 which represented ($0.06) and ($0.04) per share; respectively.  The increase from 2008 to 2009 was $1,606,302 (61.6%) . These
figures are indicative of several factors that are both financially favorable and unfavorable.  As discussed in more detail in the following paragraphs, the figures are primarily attributable to management fee income, corporate administrative and
development, professional and management fees, salaries and related costs, lease and repair costs, as well as the operations of the subsidiary and the newly acquired power plant.

Management Fee Income

For the year ended March 31, 2008, management fee income increased $187,500 compared to the same period in 2008. Management fees are earned by the Company from its subsidiary RREI at a rate of $20,833 per month ($250,000 annual).  These
fees began when the plant became
operational in January 2008. In the fiscal year ended March 31, 2008, the Company earned 3 months of management fees. For the fiscal year ended March 31, 2009, the Company earned fees for an entire year.

-47-

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Corporate Administration and Development

Administrative and development costs increased by $173,010 (28.9%) from the prior year. The primary components of the increase were the increases in exchange filing fees ($25,400), insurance ($58,000) and administration office rent
($50,500). The Company moved into a new building in January 2008.  Therefore, the prior fiscal year only included three months of the higher rental costs for the new building.

Professional and Management Fees

For the year ended March 31, 2009, professional and management costs increased $151,545 (17.9%) compared to the same period in 2008.  The increase was primarily due to additional audit fees, compliance with Sarbanes-Oxley Act and contractors
involved in plant support. The financial statement audit fees increased approximately $25,000 due to the larger scope of the audit engagement related to the Companys new entities. To comply with the Sarbanes-Oxley Act, additional audit
fees of approximately $35,000 were incurred and additional consulting fees of $61,300 were incurred for a total of $136,000 for the fiscal year. An incremental amount of approximately $83,000 was paid to outside contractors that
supported the operations of our primary subsidiary.  These contractors were performing water testing and general plant operational support.

Salary and Related Costs

For the year ended March 31, 2009, our salary costs increased $563,324 (91.2%) as compared to 2007.  There have not been notable changes in the number of management and development employees, pay scales or other benefits.  Prior to January 3,
2008, the Companys primary subsidiary was in a development stage, and directly involved efforts from management and development employees. Accordingly, their salaries and related costs (approximately $455,000 and $437,000 for the
fiscal years ended 2008 and 2007; respectively) were allocated to the subsidiary. After the subsidiary became operational in 2008, the amount of salary costs from management and development employees were significantly reduced at the subsidiary
level and now are carried at the corporate level.

Land Lease and Reservation Fees

For the year ended March 31, 2009, the lease and equipment maintenance costs increased $146,986 (211.5%) as compared to 2008. During the year, the Company began lease payments for utility line reservation fees of $101,928.  Additional lease
payments for geothermal water rights were incurred that amounted to over $81,000.  Of that amount, $41,000 was for geothermal lease rights for the exploration activities conducted by the new joint venture company Gerlach Geothermal, LLC.

Gain/Loss on Investment in Subsidiary (Raft River Energy I, LLC)

For the fiscal year ended March 31, 2009, the Companys portion of net loss reported by RREI was $8,178. This was a decrease of $220,056 in the loss reported in the same period ended in 2008. The plant became commercially operational on
January 3, 2008. The quarterly financial information is presented in the table below. The operating loss experienced in the first 3 quarters of commercial operations reflects the effect of reduced power
generation due to plant startup in winter conditions, completion of construction
punch list activities and the resulting higher labor costs, and increased
chemical treatment costs for the reduction of elevated chloride in the cooling
water circuit that were higher than anticipated. In addition, the mechanical
failure of the pump in production well RRG-2 caused several weeks of reduced
power generation and the associated lost revenues. The quarter ended December
26, 2008, was the first quarter that RREI reported a profit. The drop in
revenues and the related net loss reported in the quarter ended March 27, 2009
was related to the decline in temperature for one of the four production wells
(RRG-7) and the lower contracted power rate for the month of March. The
temperature reduction for well RRG-7 is an on-going condition that is still
being addressed. Under the terms of the PPA, the Company was paid 100% of the
contracted power rate for the months of January and February. In March, the
Company is paid the lower seasonal rate of 73.5% of the contracted power
rate.

-48-

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Select quarterly financial information for RREI is illustrated
as follows:

|                   |  |   |                 |  |   | Net Income (Loss) |  
|------------------ |  | - | --------------- |  | - | ----------------- | -
|                   |  |   | Total Operating |  |   |                   |  
|Quarter Ended:     |  |   | Revenues        |  |   | Total             |  
|                   |  |   |                 |  |   |                   |  
|March 28, 2008     |  | $ | 1,025,459       |  | $ | (406,606          | )
|June 27, 2008      |  |   | 1,126,051       |  |   | (119,141          | )
|September 26, 2008 |  |   | 1,408,357       |  |   | (319,558          | )
|December 26, 2008  |  |   | 1,625,010       |  |   | 426,339           |  
|March 27, 2009     |  |   | 1,355,582       |  |   | (14,170           | )

San Emido, Nevada Plant Energy Sales and Plant Operating
Expenses

During the fiscal year ended March 31, 2009, the Company
reported operating revenues of $1,449,696 (energy sales $1,416,853 and
production energy credit and other $32,843) and plant expenses of $2,265,277.
Effective May 1, 2008, the Company purchased and began operating a geothermal
power plant located in North Western Nevada. Therefore, this was the first year
the Company reported revenues and expenses from this plant.

Energy sales revenues were higher in the quarter ended
September 30, 2008 due to regular plant production and premium contracted rates.
Based upon the terms of the PPA, premium rates are paid during the months June
through September. The plant was not as productive in the quarters ended
December 31, 2008 and March 31, 2009 due to the down time experienced while
extensive repairs and maintenance was conducted.

Significant repair and maintenance costs were incurred during
the quarters ended December 31, 2008 and March 31, 2009. Repairs and other
improvements have been made that are expected to reduce operating costs, as well
as increase power generation. During the last fiscal year, the Company has spent
over $164,000 making various repairs to allow the facility to continue to
generate power until the repower or replacement of the power plant facility is
completed. Items included in the repairs and maintenance total includes repair
of electrical breakers and system controls, repair pentane storage and transfer
system, gear box and drive shaft alignments on all OECs and cooling tower fans,
repair leaking condenser tubes, replace turbine inlet gaskets, modification of OEC oil cooler water supply pipelines,
replacement of leaking brine valves on the OECs and replacement of check valve
on production pump 76-16. With these repairs, the power plant facility should
continue to provide operating revenues and generate positive cash flow to the
Company.

-49-

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Select quarterly financial information for the plant is
illustrated as follows:

|                      |  |          |  |   | Total     |  |   |          |   |   |           |  
|--------------------- |  | -------- |  | - | --------- |  | - | -------- | - | - | --------- | -
|                      |  | MWH      |  |   | Operating |  |   |          |   |   |           |  
|Quarter Ended:        |  | Produced |  |   | Revenues  |  |   | Net Loss |   |   | Cash Flow |  
|                      |  |          |  |   |           |  |   |          |   |   |           |  
|June 30, 2008 *       |  | 3,211    |  | $ | 273,635   |  | $ | (215,769 | ) | $ | (85,970   | )
|September 30, 2008 ** |  | 5,649    |  |   | 529,383   |  |   | (63,779  | ) |   | 131,267   |  
|December 31, 2008 **  |  | 4,097    |  |   | 337,272   |  |   | (268,918 | ) |   | (71,977   | )
|March 31, 2009        |  | 3,808    |  |   | 309,406   |  |   | (267,114 | ) |   | (65,402   | )
|                      |  | 16,765   |  | $ | 1,449,696 |  | $ | (815,580 | ) | $ | (92,082   | )

|*  | - two months of operations.                                                     
|-- | --------------------------------------------------------------------------------
|** | - Net Loss reflects a reclassification adjustment of
      $122,059 in expenses.

Fiscal Year Ended March 31, 2008 to March 31, 2007

For the years ended March 31, 2008 and 2007, we incurred net
losses of $3,549,186 and $1,942,884 which represented ($0.06) and ($0.04) per
share; respectively. The increase from 2007 to 2008 was $1,606,302 (82.7%) .
These figures are indicative of high levels of activities related to our efforts
to develop, study and establish financing for our geothermal interests, as
detailed below.

Operating Revenues

On January 3, 2008, the Companys first plant became
commercially operational. As a result, the Company began receiving operating
revenues for management fees and lease and royalty payments.

Loss on Operations of Subsidiary

The Companys share of the operating loss from the Companys
major subsidiary increased $125,898 (123.0% increase) from the prior year. The
subsidiary began commercial operations in January 2008 and costs are being
incurred to optimize production levels. The Raft River Unit I plant is currently
operating at between 9.6 to 11.7 megawatts output which is still below the
design capacity. The plant has not yet been able to drop the purchases of third
party power to run the production pumps as originally planned. The pump power
purchases have increased the plant operating costs. Management continues to
study the production issues related to this plant and believes that the plant
will be profitable after initial start up costs have been incurred.

Corporate Administration and Development Activities

Administrative and development costs increased by $364,121
(168.6%) from the prior year. The primary component of the increase was the
filing fee and other related costs for listing on the
Toronto Stock Exchange ($269,273).  Also, there were modest increases in insurance and depreciation costs.

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Professional and Management Fees

Professional costs remained at a high level to support the legal and other consulting efforts to needed to comply with the Sarbanes-Oxley Act ($74,200), issue private placement offerings ($49,900), filing of a resale registration statement
($48,900), negotiate the terms of the Raft River Energy operating agreement ($45,200) and amend prior year tax returns ($21,100). Professional and management costs of $845,908 represent 17.6% of total operating expenses for the
fiscal year ended March 31, 2008. These costs increased $137,384 (19.4%) and $423,218 (100.1%) from 2007.

Stock-Based Compensation Costs

Stock-based compensation represents 39.7% of the Companys operating expenses for the fiscal year ended March 31, 2008. These costs increased $774,563 (68.6%) from the prior year. The main reason for the increase is number of options
granted to directors, officers and employees in fiscal years ending March 31, 2007 and 2008.  The stock options are a part of our annual executive compensation plan, and are issued to obtain, retain and motivate our directors, executives and
employees. During the fiscal year ended March 31, 2008, we attained several significant milestones (moving to Toronto Stock Exchange, moving to American Stock Exchange (now NYSE Amex), completion of Raft River Unit I, etc.) which necessitated
recognition of the significant work effort of our directors, executives and employees for current and prior years.

Liquidity and Capital Resources

We believe our cash and liquid investments at March 31, 2009 are adequate to fund our general operating activities through March 31, 2010. Additional funding will be needed to finance the expansion of production volumes at Raft River and the
development of the San Emidio, Nevada and Neal Hot Springs, Oregon projects. We anticipate that the additional funding may be raised through the issuance of shares and/or through the sale of ownership interest in tax credits and benefits.

The current financial credit crisis is not anticipated to impact the ability of our customers, Idaho Power Company and Sierra Pacific Power, to pay for their power.  This power is sold under long-term contracts at fixed prices to large utilities.
Projections for 2009 indicate that both projects, Raft River and San Emidio, will generate positive cash flows to the Company. However, the current status of the credit and equity markets could delay our project development activities while the
Company seeks to obtain economic credit terms or a favorable equity market price to further the drilling and construction activities. The Company continues discussions with potential investors to evaluate alternatives for funding at the corporate
and project levels. We are also pursuing available DOE loan guarantees in order to reduce interest costs for any debt instruments the Company may require. At the current market price for the Companys stock, we do not anticipate that additional
funding will result from the exercise of current stock options or warrants.

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In these difficult times, the Company has also implemented procedures to conserve cash, reduce costs and maximize revenue.  At the corporate level, we have suspended drilling activities, cancelled non-essential consulting contracts and are reducing
all non-critical expenditures. At the project level, Raft River and San Emidio are increasing efforts to reduce operating costs and will continue to find additional cost savings.  The Company has instituted a wage and salary freeze for all employees
effective January 1, 2009. The wage and salary freeze means that we will not be granting merit pay increases until economic conditions improve and we are able to finance the Company in the equity markets.  In addition, the Company has required that
employees contribute a share of the medical insurance premiums for dependent coverage. The Company will continue to pay 100% of the insurance premiums for the employees.

Potential Acquisitions

The Company intends to continue its growth through the acquisition of ownership or leasehold interests in properties and/or property rights that it believes will add to the value of the Companys geothermal resources, and through possible
mergers with or acquisitions of operating power plants and geothermal or other renewable energy properties.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of
America. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Certain
accounting policies involve judgments and uncertainties to such an extent that there is reasonable likelihood that materially different amounts could have been reported under different conditions, or if different assumptions had been made. We
evaluate our estimates and assumptions on a regular basis. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for the financial
statements.

Cash and Cash Equivalents

The Company considers cash deposits and highly liquid investments to be cash and cash equivalents for financial reporting presentation on the consolidated balance sheet and statement of cash flows. The Company subscribes to the accounting standards
that define cash equivalents as highly liquid, short-term instruments that are readily convertible to known amounts of cash, which are generally defined investments that have original maturity dates of less than three months. With the large value of
funds invested in short-term deposits, small variations in short term interest rates may materially affect the value of cash equivalents. Investments in government obligations accumulate higher interest, but the principal balance is not insured by
the FDIC.

Property, Plant and Equipment

During the development stage of operations, the Company has purchased and otherwise acquired geothermal properties for the production of power. The geothermal properties include: drilled wells, power plant components, power plant support components,
land, land rights, surface water
rights, and geothermal water rights.  The Companys first power plant became operational in January 2008.  When the plant became operational, plant property and equipment costs were charged to operations in a systematic manner based upon the
estimated useful lives of the individual assets.  The factors and assumptions that comprise this allocation process will be based upon the best information available to us, and will be evaluated, at least, annually for viability. If it is determined
that our cost allocations have produced results that vary significantly from the conditions surrounding the value of the Companys geothermal properties, a gain or loss adjustment will be made in the period in which this determination is made.
The cost allocation or amortization process is not intended to present the fair market value of our geothermal properties; rather to allocate the actual historical costs of those properties over their service lives.

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Income Taxes

According to generally accepted accounting practices, entities must recognize assets and/or liabilities that originate with the differences in revenues and expenses presented for financial reporting purposes and those revenues and expenses that are
utilized to comply with federal and state income tax law. Often deductions can be accelerated for income tax purposes, thus creating temporary timing differences.  Other items (generally non-allowable expenses) do not reverse over time, and are
considered to be permanent differences. These types of costs are, typically, not factored into the deferred income tax asset or liability calculation. The Companys primary element that impacts the liability or asset calculation relates to the
operating losses generated in its early stages of operation that will be allowed to offset future earnings.  Stock-based compensation is another significant area that impacts that recognition of deferred income taxes. Compensation that has been
provided to employees and contractors based upon the value of the issuance of stock options is reported as an operating cost. However, this compensation is not an allowable deduction for income tax purposes.  At the end of the fiscal year, the
Companys significant tax differences would ultimately result in the recognition of an asset; however, due to the uncertainly surrounding future earnings, an allowance has been calculated that effectively removes the asset.  The Company
continues to track the financial elements that comprise the deferred income tax calculation and will remove or reduce the asset allowance if the Company is determined to be in position where it is likely to produce earnings.

Stock-Based Compensation

Effective April 1, 2007, the Company adopted a standard that states that if certain conditions are present surrounding the issuance of equity instruments as share based compensation, then circumstances may warrant the recognition of a liability for
financial reporting purposes. One such condition was present when the Company originally issued stock options in a foreign currency (Canadian dollars) to employees before the beginning of the fiscal year. Authors of the standard have reasoned that
when a condition is present that creates a financial risk to the recipient in addition to normal market risks (i.e., foreign currency translation risk), then the instrument takes on the characteristics of a liability, rather than an equity item.  As
the underlying stock options are exercised or are forfeited, then the stock based compensation liability will be reduced.  The Companys financial statements reflect these changes in the consolidated balance sheet. As the value of the options
change over the vesting periods, these changes will ultimately be reflected in the amount of expense charged to operations.

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The Company awards stock options for compensation to
non-employees for services performed and/or services performed above and beyond
expectations. After the services have been completed, the awards are made at the
discretion of the Board of Directors. The fair value of the options are
determined on the date the options are awarded according to several factors that
include the exercise price of the option, the current price of the underlying
share, the expected life of the options and the expected volatility of the
stock. Generally speaking, a longer life and higher expected volatility yields a
higher value of the option. In accordance with appropriate accounting guidance,
the Company amortizes the value of these options as operating expense during the
period in which they vest. Stock options awarded to Company employees are also
valued on the date they are awarded. However, the value of these options are
capitalized and expensed over the vesting period. The current vesting period for
all options is eighteen months. The nature of the services provided determines
whether the value will be expensed or added to the value of a Company asset. To
date, no services have been provided directly related to the construction of
property and equipment, thus, all services have been charged to operations.

Contractual Obligations

As of March 31, 2009, the following table denotes contractual
obligation by payments due for each period:

|                           | Total     | < 1 year  | 1-3 years | 3-5 years | > 5 years
|-------------------------- | --------- | --------- | --------- | --------- | ---------
|Operating Leases           | $ 538,841 | $ 143,377 | $ 208,971 | $ 87,702  | $ 98,791 
|Capital Leases             | 49,943    | 10,998    | 24,573    | 14,372    | 0        
|Stock Compensation Payable | 1,933,255 | 109,504   | 1,545,038 | 278,713   | 0        

For further information regarding lease terms and conditions,
please note Item 2, Description of Property, Lease/Royalty Terms beginning on
page 28 of this document.

The obligations reflected for Stock Compensation Payable are
reflected as due on the option expiration date. The obligation will be relieved
upon exercise of the options, which may be at any time between vesting and
expiration.

Off Balance Sheet Arrangements

As of March 31, 2009, the Company does not have any off balance
sheet arrangements.

Item 7A. Quantitative and Qualitative Disclosures About
Market Risk

Interest Risk on Investments

At March 31, 2009, the Company held investments of $3,464,906
in money market accounts. These are highly liquid investments that are subject
to risks associated with changes in interest rates. The money market funds are
invested in governmental obligations with minimal fluctuations in interest rates
and fixed terms.

Foreign Currency Risk

The Company is subject to limited amount of foreign currency
risks associated with cash deposits maintained in Canadian currency. The Company
has utilized and it is continuing to
utilize the Canadian markets for raising capital. By proper timing of the transactions and then maintenance of adequate operating funds in other financial resources, the Company has been able to mitigate some of the risks surrounding foreign
currency exchanges. At fiscal year end, the Company did not hold any deposits in Canadian currency.  Also, the Canadian currency exchange rate has been reasonably consistent over the past fiscal year. As a matter of standard operating practice, the
Company does not maintain large balances of Canadian currency; and, substantially, all operating transactions are conducted in U.S. dollars.

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The strike price for the Companys stock option plan has been stated in Canadian dollars as the plan has been administered through our Vancouver office and Pacific Corporate Trust Company. This subjects the Company to foreign currency risk in
addition to the normal market risks associated with the stock price fluctuations. A long-term liability has been established to reflect the fair value of the stock options payable. The strike price on future option grants will be stated in US
dollars.

Commodity Price Risk

The Company is exposed to risks surrounding the volatility of energy prices. These risks are impacted by various circumstances surrounding the energy production from natural gas, nuclear, hydro, solar, coal and oil. The Company has been able to
mitigate, to a certain extent, this risk by entering into long-term power purchase contracts for both the Raft River and San Emidio power plants.  These types of arrangement will be the model for power purchase contracts planned for future power
plants.

Item 8. Financial Statements and Supplementary Data

The information required hereunder is set forth under Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of
Comprehensive Income (Loss) and Stockholders Equity (Deficit), Consolidated Statements of Cash Flows, and Notes to Consolidated Financial Statements included in the consolidated financial statements that are a
part of this Report (See Part IV, Item 15, exhibit 10.37) . Other financial information and schedules are included in the consolidated financial statements that are a part of this Report.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

None.

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Item 9A. Controls and Procedures

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

In connection with the preparation of this annual report on Form 10-K, an evaluation was carried out by the Companys management, with the participation of the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the
Companys disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act)) as of March 31, 2009. Disclosure controls and procedures are designed to ensure that
information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and
communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures.

Based on their evaluation, our Chief Executive Officer and Chief Financial Officer concluded disclosure controls and procedures were effective as of March 31, 2009.

MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The Companys management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and Rule 15d-15(f) promulgated under the
Exchange Act as a process designed by, or under the supervision of, the Companys principal executive and principal financial officers, or persons performing similar functions, and effected by the Companys Board of Directors, management
and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Companys
internal control over financial reporting includes those policies and procedures that:

- pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
- provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only
in accordance with authorizations of management and directors of the Company; and
- provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Companys assets that could have a material effect on the financial statements.

The Companys management assessed the effectiveness of the Companys internal control over financial reporting as of March 31, 2009. In making this assessment, it used the criteria set forth in the Internal Control-Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our assessment, management concluded that, as of March 31, 2009, the Companys internal control over financial reporting is effective based on those
criteria.

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Williams & Webster, P.S., independent registered public accounting firm, who audited and reported on the consolidated financial statements of U.S. Geothermal, Inc. included in this report, has issued an attestation report regarding its
assessment of the Companys internal control over financial reporting as of March 31, 2009, which report appears as Exhibit 10.41.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

As of the end of the period covered by this report, there have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the quarter ended March 31, 2009, that materially affected, or are
reasonably likely to materially affect, the Companys internal control over financial reporting.

Item 9B. Other Information

Department of Energy Loan Guarantee

On February 26, 2009, the Company submitted an application for the Neal Hot Springs project to the Department of Energy (DOE) Energy Efficiency, Renewable Energy and Advanced Transmission and Distribution Solicitation loan guarantee
program under Title XVII of the Energy Policy Act of 2005. The Company was notified that its project application is complete, the power plant technology choice qualifies as new or improved under the program, and the project has been selected to
proceed in the project loan process. The Company announced on May 26, 2009, that it has been selected by the DOE to enter into due diligence review on an $85 million project loan for the Neal Hot Springs project located in eastern Oregon. If
awarded, the loan is expected to provide 80% of the $106 million estimated total capital cost.  The new plant, designed to deliver 22 megawatts of power net to the grid, is scheduled to begin commercial operations in late 2011.

Employee Stock Options

On May 26, 2009, the Company announced the regular annual grant of employee stock options pursuant to its Stock Option Plan to directors, employees and consultants to acquire 1,795,000 shares exercisable at a price of $0.92 per share for a term
of 5 years expiring May 26, 2014.

Production Pump at Raft River Energy I, LLC

On June 1, 2009, the production pipe column on a well at Raft River Energy I, LLC failed. This is the pipe that carries the geothermal fluid to the surface and supports the pump weight. The repair process has started and the pipe column and pump
have been removed from the well. While the final repair costs have not been determined, initial estimates indicate that repair costs could exceed $600,000. Plant energy production has been reduced due to the failure. If the repair process goes
according to plan, the repairs will be completed by June 19, 2009.

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PART III

Item 10. Directors, Executive Officers, and Corporate
Governance

Identification of Directors, Executive Officers and
Significant Employees

The following sets forth certain information concerning the
current directors, executive officers and significant employees of our company.
Each director has been elected to serve until our next annual meeting of
stockholders and until his successor has been elected and qualified. Each
executive officer serves at the discretion of the board of directors of our
company, and each has been elected for a 1 year term.

|NAME                       | AGE | POSITION                                             
|-------------------------- | --- | -----------------------------------------------------
|                           |     |                                                      
|Daniel J. Kunz             | 57  | Chief Executive Officer,
      President and Director
|Douglas J. Glaspey         | 56  | Chief Operating Officer and Director                 
|John H. Walker (1) (2) (3) | 60  | Chairman of the Board and
      Director             
|Paul A. Larkin (1) (2) (3) | 58  | Director                                             
|Leland R. Mink (1) (3)     | 69  | Director                                             
|Kerry D. Hawkley           | 55  | Chief Financial Officer and Corporate Secretary      
|Kevin Kitz                 | 48  | Vice President, Development,
      Geo-Idaho         
|Robert Cline               | 52  | Vice President, Engineering, Geo-Idaho               
|Christopher S. Harriman    | 51  | President, U.S. Geothermal
      Services LLC        

|(1) | Member of the Audit, Compensation and Governance
      Committees.
|--- | ------------------------------------------------------------------
|(2) | Audit Committee Financial Expert.                                 
|(3) | Independent Director.                                             

Background and Business Experience

Daniel J. Kunz is the co-founder, President and Chief
Executive Officer and a director of GTH and the President of Geo-Idaho. He has
served as a director of the company since March 2000, and was Chairman of the
Board of Directors from March 2000 until December 2003. Prior to the acquisition
of Geo-Idaho, he served as a director and the President for that company from
February 2002 until the acquisition. Mr. Kunz was an executive of Ivanhoe Mines
Ltd. from 1997, and served as its President, Chief Executive Officer and
Director from November 1, 2000 until March 1, 2003. From March 2, 2003 until
March 8, 2004, Mr. Kunz served as President of Jinshan Gold Mines Inc. Mr. Kunz
has more than 30 years of experience in international mining, engineering and
construction, including, marketing, business development, management,
accounting, finance and operations. Mr. Kunz was a founder of and directed the
initial public offering of the NASDAQ listed MK Gold Company (President,
Director & CEO) and held executive positions with Morrison Knudsen
Corporation (Vice President & Controller, and as CFO to the Mining Group).
Mr. Kunz holds a Masters of Business Administration and a Bachelor of Science in
Engineering Science. He is currently a director of several companies publicly
traded on the Toronto Stock Exchange and the TSX Venture Exchange, including
Jinshan Gold Mines Inc., Kenai Resources Ltd., and Chesapeake Gold Corp.

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Douglas J. Glaspey is the co-founder, Chief Operating Officer and a director of GTH. He has served as a director of the company since March 2000, and served as its President from March 2000 until the acquisition of Geo-Idaho. He also served
as a director and the Chief Executive Officer of Geo-Idaho from February 2002 until the acquisition, and continues to serve as President. From December 1986 to the present, Mr. Glaspey has been a Metallurgical Engineer and Project Manager with Twin
Gold Corporation. Mr. Glaspey has 29 years of operating and management experience. He holds a Bachelor of Science in Mineral Processing Engineering and an Associate of Science in Engineering Science.  His experience includes production management,
planning and directing resource exploration programs, preparing feasibility studies and environmental permitting.  He has formed and served as an executive officer of several private resource development companies in the United States, including
Drumlummon Gold Mines Corporation and Black Diamond Corporation.

John H. Walkeris a director and the Chairman of the Board of directors of GTH. He has held that position since December 2003. He is Managing Partner of the IMG-Aurion Infrastructure Fund, a North American US$500 million dollar
infrastructure fund based in Toronto and Washington D.C. with a focus on mid-market investment opportunities. He brings over 35 years experience in urban planning, energy security, investment banking and business diplomacy. Mr. Walker was a Founding
Director of the Greater Toronto Airports Authority and was involved in the development of a $4.4 billion terminal complex at Toronto Pearson Airport, which was completed in 2005. He has held positions at Ontario Hydro, Loewen Ondaatje
McCutcheon, Falconbridge, Mihaly International Canada, the Town of Oakville and the City of New Haven. Mr. Walker has a BS from Springfield College in urban studies and a Master of Environmental Studies degree from York University.

Paul Larkin serves as a director of GTH, a position he has held since March 2000. He served as Secretary of GTH until December, 2003, and served as a director and the Secretary-Treasurer of Geo-Idaho from February 2002 until the
acquisition.Since 1983, Mr. Larkin has also been the President of the New Dawn Group, an investment and financial consulting firm located in Vancouver, British Columbia, and the President of Tyner Resources Ltd., a TSX Venture Exchange
listed company. New Dawn is primarily involved in corporate finance, merchant banking and administrative management of public companies.  Mr. Larkin held various accounting and banking positions for over a decade before founding New Dawn in 1983,
and currently serves on the boards of the following companies which are listed on the TSX Venture Exchange: Tyner Resources Ltd., LNG Energy Limited, Kenai Resource Inc., and Condor Resources Inc.

Dr. Leland Roy Mink is the former Program Director for the Geothermal Technologies Program, U.S. Department of Energy (DOE). Prior to working for the DOE Dr. Mink was the Vice President of Exploration for U.S. Geothermal Inc.  He
has also worked for Morrison-Knudsen Corporation, Idaho Bureau of Mines and Geology and Idaho Water Resources Research Institute.

Kerry D. Hawkley serves as the companys Chief Financial Officer and Corporate Secretary. He has served as the companys controller since July 2003, and became CFO as of January 1, 2005. Since July 2003, he has also provided
consulting services to Triumph Gold Corp. From 1998 to June 2003, Mr. Hawkley served as controller, director and treasurer of LB Industries.  Mr.
Hawkley has over 30 years experience in all areas of accounting, finance and administration. He holds Bachelor of Business Administration degrees in Accounting and Finance. He started his career as an internal auditor with Union Pacific Corporation
and has held various accounting management positions in the oil and gas, truck leasing, mining and energy industries.

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Kevin Kitz is the Vice President-Development of Geo-Idaho. He joined the company in April 2003. He is a mechanical engineer with 19 years of geothermal power plant design, construction and operating experience with UNOCAL, with whom he worked
until November 2002.  He holds a Bachelor of Science in Mechanical Engineering and Material Science, and is a Professional Engineer in California. During his career with Unocal, he was a Production and Operations Engineer at the 75 megawatt Salton
Sea geothermal power plant in southern California, a Senior Production Engineer at the Geysers geothermal field in northern California, and a Power Plant Engineering Advisor in the Philippines for geothermal power plants ranging from 12 to 55
megawatts.

Robert Cline is the Vice President-Engineering of Geo-Idaho.  He joined the company in February 2005. He is a civil engineer with 24 years experience developing energy and water resources projects in the western U.S. He holds Bachelor of
Science degrees in Civil Engineering and Physics, and is a Professional Engineer in Arizona and Oregon. Prior to joining US Geothermal, he was the Manager of Engineering at Ida-West Energy Company, playing a key role in developing several
hydroelectric and gas-fired generating facilities, and was instrumental in several highly successful hydroelectric acquisitions. Prior to 1991, he worked nine years for the US Bureau of Reclamation where he was involved in engineering, contracting
and construction of various water resources related projects in Arizona.

Christopher S. Harrimanis the President of US Geothermal Services LLC.He has over ten years of power management experience and has eighteen years of industry experience.  He worked for Black Hills Generation as plant
manager of two 10 megawatt cogeneration facilities in southern Idaho. He also spent eight years with Exxon Shipping, and served in the U.S. Coast Guard. He joined us in July 2006.

None of the directors or officers has entered into any arrangement or understanding with any other person pursuant to which he was selected as an officer or selected as a director or nominee of the Company.

Family Relationships

There are no family relationships between directors and the executive officer.

Code of Ethics

The Board adopted the Companys Code of Ethics in September 2005.  The code of ethics applies to all directors, officers and employees of the company. Amendments or waivers to the Code of Ethics will be disclosed within four business days on a
Form 8-K or on the Companys web page at www.usgeothermal.com. The Code of Ethics is included in the Companys web page.

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Audit Committee

The primary function of the Audit committee is to assist the Board in fulfilling its financial oversight responsibilities by reviewing the financial reports and other financial information provided by the Corporation to regulatory authorities and
shareholders, the Corporations systems of internal controls regarding finance and accounting and the Corporations auditing, accounting and financial reporting processes. Consistent with this function, the Audit Committee will encourage
continuous improvement of, and should foster adherence to, the Corporations policies, procedures and practices at all levels. The Audit Committees primary duties and responsibilities are:

- Serve as an independent and objective party to monitor the Corporations financial reporting and internal control system and review the Corporations financial statements;
- Review and appraise the performance of the Corporations external auditors;
- Provide open avenues of communication among the Corporations auditors, financial and senior management and the Board.

Composition

The Audit Committee shall be comprised of three directors as determined by the Board, each of whom shall be free from any relationship that, in the opinion of the Board, would interfere with the exercise of his or her independent judgment as a
member of the Audit Committee. At least one member of the Audit Committee shall have accounting and related financial management expertise. All members of the audit Committee that are not financially literate will work towards becoming financially
literate to obtain a working familiarity with basic finance and accounting practices. For the purposes of the Audit Committees Charter, the definition of financially literate is the ability to read and understand a set of financial
statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity that can be resumed to be raised by the Corporations financial statement. The members of the Audit
Committee shall be elected by the full Board at its first meeting after the annual shareholders meeting. Unless a Chair is elected by the full Board, the members of the Audit Committee may designate a Chair by a majority vote of the full Audit
Committee membership.

The current members of the Audit Committee are Paul A. Larkin (Chair and Financial Expert), John H. Walker and Leland L. Mink.

Responsibilities and Duties

To fulfill its responsibilities and duties, the Audit Committee shall review and update the Audit Committees charter annually, and review the Corporations financial statements, managements discussion and analysis (MD&A) and any
annual and interim earnings, press releases before the Corporation publicly discloses this information and any reports or other financial information (including quarterly financial statements), which are submitted to any governmental body, or to the
public, including any certification, report, opinion, or review rendered by the external auditors.

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Meetings

The Audit Committee shall meet at least four times annually, or more frequently as circumstances dictate. As part of its job to foster open communication, the Committee will meet at least annually with the Chief Financial Officer and the external
auditors in separate sessions.

Beneficial Ownership Reporting Compliance

Based solely on its review of the copies of such reports
received by the Company, and on written representations by the Company's
officers and directors regarding their compliance with the applicable reporting
requirements under Section 16(a) of the Exchange Act, the Company believes that,
with respect to its fiscal year ended March 31, 2009, all of the Company's
officers and directors, and all of the persons known to the Company to own more
than ten percent (10%) of the Common Stock, complied with all such reporting
requirements except as follows: Mr. Kunz was late filing a Form 4 representing
one transaction. Mr. Glaspey was late filing a Form 4 representing two
transactions. Mr. Hawkley was late filing a Form 4 representing two
transactions. And Mr. Larkin was late filing a Form 4 representing one
transaction.

Item 11. Executive Compensation

The Compensation and Benefits Committee is appointed annually by the Board of Directors to discharge the Board's responsibilities relating to compensation and benefits of the executive officers of the Company.  The goals of the committee is to
attract, retain and motivate our executive officers by providing appropriate levels of compensation and benefits while taking into consideration, among such other factors as it may deem relevant, the Company's performance, shareholder returns, the
value of similar incentive awards to executive officers at comparable companies and the awards given to the executive officers in past years. The main categories of compensation available to the committee are base salary, discretionary annual
performance bonuses, stock option grants, stock awards, and insurance reimbursements.

While U.S. Geothermal does not attach a weighting to the various components of executive compensation, the Compensation Committee attempts to pay a competitive salary (retention) to its executives while providing long-term incentive to the
executives through equity awards (ownership/rewards) in order to align their interests with the long-term progression of the Company as a whole.

We compete with a variety of companies for our executive-level employees. The Compensation and Benefits Committee uses base salary to compensate the executive officers for services rendered as well as for motivation and retention purposes.  Base
salaries are intended to be competitive for companies of similar size and purpose, also taking into consideration individual factors such as experience, tenure, institutional knowledge and qualifications. Base salaries are reviewed annually to
determine whether they are consistent with our overall compensation objectives. In considering increases in base salary, the Compensation and Benefits Committee reviews individual and corporate performance, market and industry conditions, and our
overall financial health.

The CEO, and Compensation and Benefits Committee perform an informal annual review of compensation practices of similar size companies to educate themselves of the general parameters (levels and types of compensation) for executive compensation.
They do not, however, benchmark the various components of executive pay. Their review highlights inconsistencies with compensation practices at similar sized companies and provides the committee with knowledge of the competitive landscape for its
executives. None of the other executive officers participate in the determination of executive pay.

The Compensation and Benefits Committee may grant annual performance bonuses as a reward for achievement of individual and corporate short-term goals.  Any grant of an annual performance bonus is discretionary and the amount is determined after
recommendation from the chief executive officer.  Bonus awards are dependent upon our financial and operational
performance as well as the completion of specific milestone events by the individual executive officer.  The Company has awarded bonus payments during two years when salaries were significantly below market, but does not consider this method of
compensation as a material aspect of our continuing compensation package (approximately 5% of total executive compensation during 2007 and 2008; zero during 2009). The bonuses paid in January 2007 were based on the significant milestones and
achievements of the company during the calendar year 2006 including the following:

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- Close $25 million share private placement
- Raft River construction groundbreaking
- $34 million tax equity investment deal with Goldman Sachs
- Improved terms of draft power purchase agreement (PPA) with Idaho Power Company
- Initiate first well drilling at Raft River in 30 years
- Acquire second geothermal project with reservoir discovery
- Sign interconnection agreement for power transmission at Raft River
- Obtain air quality, construction and county conditional use permits

The second bonus ever paid by the company amounted to one months salary for each employee and was paid in January of 2008 for the excellent work completed and significant milestone achievements in calendar year 2007. This bonus also recognized
each employees dedication and long working hours to complete the construction of the Pacific Northwests first geothermal power plant with the salaried employee team working a significant number or hours over the expected 40 hours per week and
working through holidays and vacation time to get the project complete. Other milestones include:

- Complete $20 million private placement
- Completion of SB 2 registration to avoid penalty payable to PIPE places
- Sign PPA with Idaho Power Company
- Expand energy rights at Raft River
- Achieve listing on main Toronto Stock Exchange
- Achieve listing on OTC Bulletin board
- Complete construction of 13 MW geothermal power plant at Raft River
- Initiate power generation at power plant

Generally, the Compensation and Benefits Committee grants stock options to all employees, including executive officers, annually after completion of our annual financial reports.  Stock options are granted with an exercise price equal to the market
value of our common stock on the date of the grant, and with a term of five years.  The timing of the stock option grant is not coordinated with the release of material non-public information and is typically in the first or second fiscal quarter.
The options vest 25% on date of grant, and another 25% each six months thereafter. In 2007, stock option grants to executive officers represented approximately 15% of the total stock option grants to all employees.

-63-

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Our executive officers do not receive any material incremental benefits that are not otherwise available to all of our employees. Our health and dental insurance plans are the same for all employees.

Effective January 1, 2008, Daniel J. Kunz signed an employment agreement that sets the amount of time devoted to the business of the Company to 140 hours per month at a compensation of $170,400 annually.  Mr. Kunz is entitled to receive
performance bonuses and incentive stock options as determined by the Companys board of directors, benefits (including for immediate family) as are or may become available to other employees, and vacation. The Company will also provide
reasonable life insurance and accidental death coverage with the proceeds payable to Mr. Kunzs estate or specified family member.  The employment agreement may be terminated by the Company without notice, payment in lieu of notice, severance
or other sums for causes which include failure to perform in a competent and professional manner, appropriation of corporate opportunities or failure to disclose a conflict of interest, conviction which has become final for an indictable offense,
fraud, dishonesty, refusal to follow reasonable and lawful direction of the company, breach of fiduciary duty, and a declaration of bankruptcy by or against Mr. Kunz. Otherwise, the Company may terminate the agreement upon one month written notice.
The agreement includes covenants by Mr. Kunz of confidentiality and non-competition, and provides for equitable relief in the event of breach. In the case of a change of control, Mr. Kunz can elect to receive compensation equal to 24 monthly
installments of his normal compensation no later than five working days after the effective date of the change of control (currently $340,800).  Mr. Kunzs
2008 employment agreement expired on December 31, 2008. Mr. Kunz's employment agreement for 2009 is currently under negotiation and has not been
completed. Mr. Kunz and the Company have agreed to continue to pay Mr. Kunz under the 2008 salary guidelines until the new agreement can be completed.

Douglas J. Glaspey, Chief Operating Officer, signed an employment agreement on January 1, 2009, which provides for an annual salary of $144,000 which is unchanged from 2008.  Mr. Glaspey is entitled to receive performance bonuses and incentive
stock options as determined by the Companys board of directors, benefits (including for immediate family) as are or may become available to other employees, and vacation.  The employment agreement may be terminated by the Company without
notice, payment in lieu of notice, severance or other sums for causes which include failure to perform in a competent and professional manner, appropriation of corporate opportunities or failure to disclose a conflict of interest, conviction which
has become final for an indictable offense, fraud, dishonesty, refusal to follow reasonable and lawful direction of the Company, breach of fiduciary duty, and a declaration of bankruptcy by or against Mr. Glaspey. In the event of early termination
due to the Companys failure to comply with the agreement, the employee would be entitled to compensation earned through the date of termination. In the case of termination of the employment agreement due to a change control, Mr. Glaspey will
receive a lump sum payment in the amount equal to 18 monthly installments of the employees normal compensation (currently $216,000) and continuation of his medical and dental insurance (currently $9,100) for the subsequent 18 month
period. A copy of the employment agreement is included as Exhibit 10.17 in Part IV of this report.

Kerry D. Hawkley, Chief Financial Officer, signed an employment agreement on January 1, 2009, which provides for an annual salary of $127,800 which is unchanged from 2008.  Mr. Hawkley is entitled to receive performance bonuses and incentive
stock options as determined by the Companys board of directors, benefits (including for immediate family) as are or may become available to other employees, and vacation. The
employment agreement may be terminated by the Company without notice, payment in
lieu of notice, severance or other sums for causes which include failure to
perform in a competent and professional manner, appropriation of corporate
opportunities or failure to disclose a conflict of interest, conviction which
has become final for an indictable offense, fraud, dishonesty, refusal to follow
reasonable and lawful direction of the Company, breach of fiduciary duty, and a
declaration of bankruptcy by or against Mr. Hawkley. In the event of early
termination due to failure comply with the agreement; the employee would be
entitled to compensation earned through the date of termination. In the case of
termination of the employment agreement due to a change control, Mr. Hawkley
will receive a lump sum payment in the amount equal to 18 monthly installments
of the employees normal compensation (currently $191,700) and continuation of
his medical and dental insurance (currently $5,800) for the subsequent 18 month
period. A copy of the employment agreement is included as Exhibit 10.16 in Part
IV of this report.

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|Summary Compensation Table                                         
|-------------------------------------------------------------------
|Name and Principal Position(s)                                     
|(a)                                                                
|Daniel J. Kunz, 
    Chief Executive
    Officer 
    and President
|                                                                   
|                                                                   
|Douglas J. Glaspey, 
    Chief Operating Officer                   
|                                                                   
|                                                                   
|Kerry D. Hawkley, 
    Chief Financial Officer                     
|                                                                   
|                                                                   
|Total Executive Officers                                           
|                                                                   
|                                                                   

|    |                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------
|(c) |  Annual compensation that includes the dollar value of
      base salary (cash and non-cash).                                                        
|(d) | - Dollar value of bonuses (cash and non-cash) are
      eligible to all employees. Bonus plans are submitted and approved by the
      Board annually.
|(f) |  Stock options are valued at the grant date using the
      SFAS 123R value.                                                                         
|(i) |  Other compensation consists of all other compensation
      not disclosed in another category.                                                      

-65-

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TERMINATION OR CHANGE OF CONTROL COMPENSATION

|                             |  |               |  |            |  | Termination 
|---------------------------- |  | ------------- |  | ---------- |  | ------------
|                             |  | Termination   |  | Change     |  | after change
|                             |  | not for cause |  | of control |  | of control  
|Executive Officer            |  | ($)           |  | ($)        |  | ($)         
|                             |  |               |  |            |  |             
|Daniel J. Kunz*              |  |               |  |            |  |             
|Salary                       |  | -             |  | -          |  | -           
|Target bonus payout          |  | -             |  | -          |  | -           
|Medical benefit continuation |  | -             |  | -          |  | -           
|Equity acceleration          |  | -             |  | -          |  | -           
|                             |  |               |  |            |  |             
|Total                        |  | -             |  | -          |  | -           
|Douglas J.
    Glaspey       |  |               |  |            |  |             
|Salary                       |  | 12,000        |  | -          |  | -           
|Target bonus payout          |  | -             |  | -          |  | 216,000     
|Medical benefit continuation |  | 504           |  | -          |  | -           
|Equity acceleration          |  | -             |  | -          |  | 9,100       
|                             |  |               |  |            |  |             
|Total                        |  | 12,504        |  | -          |  | 225,100     
|Kerry D. Hawkley             |  |               |  |            |  |             
|Salary                       |  | 10,650        |  | -          |  | -           
|Target bonus payout          |  | -             |  | -          |  | 191,700     
|Medical benefit continuation |  | 320           |  | -          |  | 5,800       
|Equity acceleration          |  | -             |  | -          |  | -           
|                             |  |               |  |            |  |             
|Total                        |  | 10,970        |  | -          |  | 197,500     

* - Daniel J. Kunz's employment contract expired on December 31, 2008. Dan is
currently being compensated under the terms of the 2008 agreement.

-66-

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GRANTS OF PLAN-BASED AWARDS

|                        |         | Estimated Future Payouts Under | Estimated Future Payouts    |           | All Other |        |       
|----------------------- | ------- | ------------------------------ | --------------------------- | --------- | --------- | ------ | ------
|                        |         | Non-Equity Incentive Plan      | Under Equity Incentive Plan | All Other | Option    |        |       
|                        |         |                                | Awards                      |           |           | Awards |       
|                        |         |                                |                             |           |           |        |       
|                        |         |                                |                             |           |           |        |       
|                        |         |                                |                             |           |           |        |       
|                        |         |                                |                             |           |           |        |       
|                        | Grant   | Threshold                      | Target                      | Maximum   | Threshold | Target | Maximu
|Name                    | Date    | ($)                            | ($)                         | ($)       | (#)       | (#)    | m (#) 
|(a)                     | (b)     | (c)                            | (d)                         | (e)       | (f)       | (g)    | (h)   
|Daniel J. Kunz,         |         |                                |                             |           |           |        |       
|Chief Executive Officer | 5/19/08 |                                |                             |           |           |        |       
|                        |         |                                |                             |           |           |        |       
|Douglas J Glaspey,      |         |                                |                             |           |           |        |       
|Chief Operating         | 5/19/08 |                                |                             |           |           |        |       
|Officer                 |         |                                |                             |           |           |        |       
|Kerry D Hawkley,        |         |                                |                             |           |           |        |       
|Chief Financial         | 5/19/08 |                                |                             |           |           |        |       
|Officer                 |         |                                |                             |           |           |        |       



|Outstanding Equity Awards at Fiscal Year End
|--------------------------------------------
|                                            
|Executive Name                              
|(a)                                         
|Daniel J. Kunz                              
|Douglas J. Glaspey                          
|Daniel J. Kunz                              
|Douglas J. Glaspey                          
|Kerry D. Hawkley                            
|Daniel J. Kunz                              
|Douglas J. Glaspey                          
|Kerry D. Hawkley                            



|Option Exercises
    and Stock Vested
|-------------------------------------
|                                     
|                                     
|Name                                 
|                                     
|(a)                                  
|Douglas J. Glaspey                   

-67-

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GTH did not award any shares, units or rights to any executive
officer under a Long-Term Incentive Plan during the fiscal years ended March 31,
2007, 2008, and 2009.

|Director Compensation
|---------------------
|Name                 
|(a)                  
|John H. Walker       
|Daniel J. Kunz       
|Paul A. Larkin       
|Douglas J. Glaspey   
|Leland L. Mink       
|Total                

*  Stock options are valued at the grant date using the SFAS 123(R) value.



Compensation Committee Interlocks and Insider
Participation

During the year ended March 31, 2009, the Compensation and
Benefits Committee was comprised of John H. Walker, Paul A. Larkin and Leland L.
Mink.

No member of the Compensation Committee during the fiscal year
ended March 31, 2009 is or has been a former or current executive officer or
employee of the Company or has had any relationships requiring disclosure by the
Company under the SECs rules requiring disclosure of certain relationships and
related-party transactions. None of the Companys executive officers served as a
director or a member of a compensation committee (or other committee serving an
equivalent function) of any other entity, the executive officers of which served
as a director or member of the Compensation Committee during the fiscal year
ended March 31, 2009.

Compensation Committee Report

The Compensation and Benefits Committee has reviewed and
discussed with management the Compensation Discussion and Analysis contained in
this Annual Report. Based on this review and discussion, the Compensation and
Benefits Committee recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in the Companys Annual Report.

-68-

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Compensation and Benefits Committee

John H. Walker, Paul A. Larkin & Leland L. Mink

Item 12. Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters

The following table details the number of securities authorized
for issuance under the Companys equity compensation plans for the fiscal year
ended March 31, 2009:

|Equity Compensation Plan Information                        
|------------------------------------------------------------
|                                                            
|Plan Category                                               
|                                                            
|                                                            
|Equity compensation plans approved by
      security holders
|Equity compensation plans not approved by security holders  
|Total                                                       

The following table sets forth certain information known to the
Company regarding the beneficial ownership of common stock as of March 31, 2009,
or as of such later date as is listed below, of each person known to be the
holder of more than 5% of our issued and outstanding stock. The stock
information agrees to data provided by the Beneficial Owners on Schedule 13G as
filed with the SEC during February 2009. The percentage is based on 62,033,882
shares of common stock issued and outstanding as of June 8, 2009.

|Significant Owners
|------------------
|Title of Class    
|(1)               
|Common Stock      
|Common Stock      
|Common Stock      

The following table sets forth certain information known to the
Company regarding the beneficial ownership of the common stock as of March 31,
2009, or as of such later date as indicated below, by (i) each of our directors,
(ii) each of our named executive officers, and (iii) all of our executive
officers and directors, serving at the time of the filing of this Report, as a
group. The percentage is based on 62,033,882 shares of common stock issued and
outstanding as of June 8, 2009, and adds the shares that the officer or director
have the right to acquire within 60 days.

-69-

---

|Name                 | Common Shares
      Beneficially Owned | Shares Individuals
      have the right to acquire within 60 days | Total Number of
      Shares Beneficially Owned | Percent of Class
|-------------------- | -------------------------------------- | ----------------------------------------------------------------- | ----------------------------------------------- | ----------------
|(1)                  | (2)                                    | (3)                                                               | (4)                                             | (5)             
|Daniel J. Kunz       | 2,346,026                              | 757,500                                                           | 3,103,526                                       | 4.94            
|Douglas J. Glaspey   | 519,557                                | 607,500                                                           | 1,127,057                                       | 1.80            
|Kerry D. Hawkley     | 150,000                                | 115,000                                                           | 265,000                                         | 0.43            
|John
      H. Walker | 78,234                                 | 150,000                                                           | 228,234                                         | 0.37            
|Paul A. Larkin       | 368,068                                | 255,000                                                           | 623,068                                         | 1.00            
|Leland R. Mink       | 20,000                                 | 165,000                                                           | 185,000                                         | 0.30            

Item 13. Certain Relationships and Related Transactions,
and Director Independence

Director Independence

Our Board of Directors has determined that each of our
directors other than Daniel J. Kunz and Douglas J. Glaspey has no material
relationship with U.S. Geothermal Inc. and is independent. Mr. Kunz is not
independent because he is the Chief Executive Officer and President of U.S.
Geothermal Inc. Mr. Glaspey is not independent because he is Chief Operations
Officer of U.S. Geothermal Inc. Each of our Audit, Governance and Compensation
Committee is composed only of independent directors.

Our Board has adopted certain standards to assist it in
assessing the independence of each of our directors. Absent other material
relationships with U.S. Geothermal Inc., a director of U.S. Geothermal Inc. who
otherwise meets the independence qualifications of the NYSE/AMEX listing
standards may be deemed independent by the Board of Directors after
consideration of all of the relationships between U.S. Geothermal Inc., or any
of our subsidiaries, and the director, or any of his or her immediate family
members (as defined in the NYSE/AMEX listing standards), or any entity with
which the director or any of his or her immediate family members is affiliated
by reason of being a partner, officer or a significant shareholder thereof.

In assessing the independence of our directors, our full Board
carefully considered all of the business relationships between U.S. Geothermal
Inc. and our directors or their affiliated companies. This review was based
primarily on responses of the directors to questions in a
questionnaire regarding employment, business, familial, compensation and other relationships with U.S. Geothermal Inc. and our management.

-70-

---

The Companys on Stock is listed on the NYSE Amex and the TSX. Under NYSE Amex rules, the Board of Directors is required to affirmatively determine that each independent director has no material relationship with our company that
would interfere with the exercise of independent judgment. Our Board has determined that the following directors are independent as required by NYSE Amex listing standards: John H. Walker, Paul A. Larkin, and Leland R. Mink.
Additionally, all members of our Audit Committee are independent as defined in Rule 10A-3(b)(1) under the Exchange Act and for the purposes of Canadian National Instrument 58-101.

Transactions or Certain Business Relationships with Directors, Management and Others

The NYSE/AMEX has long recommended that independent Directors review related party transactions. At US Geothermal, the Audit Committee oversees our written procedure for identifying, analyzing and approving related party transactions. The Audit
Committee also reviews information about Director independence and recommends independence standards and determinations to the Board.

The procedure for related party transactions applies to any transaction between US Geothermal or its affiliated companies on the one hand, and a Director, executive officer or his/her family members on the other hand. The procedure requires prior
review by counsel of any related party transaction regardless of size. The prior review allows the Board and management to ensure that any related party transaction is consistent with the best interest of US Geothermal and its shareholders and,
where a Director is involved, to assess the impact on Director independence.

The prior review of a proposed related party transaction includes a determination as to whether the transaction has been made on an arms length basis (that is, on terms comparable to those provided to unrelated third parties). The review also
includes information about other, unrelated alternatives to a proposed related party transaction. For example, if a purchase of supplies were proposed, then the review would identify competing vendors/terms, or if a relative were considered for a
job opening then the review would include a description of other applicants and their qualifications.

If a related party transaction is proposed, the results of the prior review are presented to the Audit Committee. If the Committee is comfortable with the proposed related party transaction, the transaction is tracked to assure that as the
transaction occurs, it remains within the approved scope and amount. If a related party transaction or series of transactions spans multiple years, it is reconsidered once a year by the Committee.

US Geothermal maintains a list of related parties for each Director and executive officer which is updated as the Company learns of changes (for example, upon marriage or change of employment) and is confirmed in writing once a year by the Director
or executive officer. To help assure no related party transaction has been inadvertently overlooked, US Geothermal checks accounts receivable and sales and accounts payable and disbursements against the list of  related parties quarterly. Also, annually US Geothermal asks
for written confirmation from each Director and executive officer as to all
related party transactions that exceed the thresholds in the NYSE AMEX listing
standards, the more restrictive US Geothermal Director Independence Standard,
and for Audit Committee members, the additional independence standards specified
in Rule 10A-3(b)(1) under the Exchange Act, and various disclosure thresholds
and materiality standards as determined by US Geothermals counsel and
accountants to be prudent for ensuring compliance with applicable laws and
regulations.

-71-

---

The Company has not entered into any material business
transactions, nor does a business relationship exist, with directors, executive
officers, or family of directors or executive officers as at March 31, 2009.

The Goldman Sachs Group, an owner of more than 5% of the
Companys common stock, is also the owner of Raft River I Holdings LLC. Our
relationship with Raft River I Holdings LLC is more fully described on page 6,
21, 32 and 44 of this document.

Item 14. Principal Accountant Fees and Services

The aggregate fees billed by the Companys principal accountant
for the fiscal years ended March 31, 2009 and 2008 are as follows:

|Years Ended |   |                |  |   |                   |  |   |                     |  |   |                | 
|----------- | - | -------------- |  | - | ----------------- |  | - | ------------------- |  | - | -------------- | 
|March 31,   |   | Audit Fees (1) |  |   | Audit Related (2) |  |   | Tax Preparation (3) |  |   | Other Fees (4) | 
|2009        | $ | 55,007         |  | $ | 34,264            |  | $ | -                   |  | $ | 77,992         | 
|2008        |   | 32,018         |  |   | -                 |  |   | -                   |  |   | 74,400         | 

|(1) | Includes services for the annual audit of the Companys
      financial statements and services associated with SB-2 registration
      statements filed with the SEC.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                       
|(2) | Fees charged for assurance and related services
      reasonably related to the performance of an audit, and not included under
      Audit Fees.                   
|    |                                                                                                                                                                       
|(3) | Fees charged for tax compliance, tax advice and tax
      planning services.                                                                                          
|    |                                                                                                                                                                       
|(4) | Fees for services other than disclosed in any other
      column.                                                                                                     

The Audit Committee reviews the Companys financial statements,
MD&A and any annual and interim earnings press releases before the Company
publicly discloses this information and any reports or other financial
information (including quarterly financial statements) which are submitted to
any governmental body, or to the public, including any certification, report,
opinion, or review rendered by the principal accountant performing the external
audit of the Companys records. The Audit Committee also confirms that adequate
procedures are in place for the review of the Companys public disclosure of
financial information extracted or derived from the Companys financial
statements.

The Audit Committee engaged Williams & Webster to perform
the annual audit of the financial statements of the company. Audit fees and
scope of work are monitored and approved by the Audit Committee as part of the
engagement process. Items not included in the engagement process are reviewed
and authorized by senior management following pre-approval of the services by
the Audit Committee.

-72-

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PART IV

Item 15. Exhibits, Financial Statement
Schedules

EXHIBIT LIST

|EXHIBIT 
    NUMBER | DESCRIPTION                                                                                                                                                                                                                                                                        
|------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                    |                                                                                                                                                                                                                                                                                    
|3.1                 | Certificate of Incorporation of U.S. Cobalt Inc. (now
      known as U.S. Geothermal Inc.) (Incorporated by reference to exhibit 3.1
      to the registrants Form SB-2 registration statement as filed on July 8,
      2004)                                                    
|                    |                                                                                                                                                                                                                                                                                    
|3.2                 | Certificate of Domestication of Non-U.S. Corporation
      (Incorporated by reference to exhibit 3.2 to the registrants Form SB-2
      registration statement as filed on July 8, 2004)                                                                                          
|                    |                                                                                                                                                                                                                                                                                    
|3.3                 | Certificate of Amendment of Certificate of Incorporation
      (changing name of U.S. Cobalt Inc. to U.S. Geothermal Inc.) (Incorporated
      by reference to exhibit 3.3 to the registrants Form SB-2
      registration statement as filed on July 8, 2004)                    
|                    |                                                                                                                                                                                                                                                                                    
|3.4                 | Bylaws of U.S. Geothermal Inc. (formerly U.S. Cobalt
      Inc.) (Incorporated by reference to exhibit 3.4 to the registrants Form
      10-Q quarterly report as filed on February 14, 2008)                                                                                     
|                    |                                                                                                                                                                                                                                                                                    
|3.5                 | Plan of Merger of U.S. Geothermal, Inc. and EverGreen
      Power Inc. (Incorporated by reference to exhibit 3.5 to the registrants
      Form SB-2 registration statement as filed on July 8, 2004)                                                                              
|                    |                                                                                                                                                                                                                                                                                    
|3.6                 | Amendment to Plan of Merger (Incorporated by reference to
      exhibit 3.6 to the registrants Form SB-2 registration statement as filed
      on July 8, 2004)                                                                                                                   
|                    |                                                                                                                                                                                                                                                                                    
|4.1                 | Form of Stock Certificate (Incorporated by reference to
      exhibit 4.1 to the registrants Form SB-2 registration statement as filed
      on July 8, 2004)                                                                                                                     
|                    |                                                                                                                                                                                                                                                                                    
|4.2                 | Form of Warrant Certificate (Incorporated by reference to
      exhibit 4.2 to the registrants Form SB-2 registration statement as filed
      on July 8, 2004)                                                                                                                   
|                    |                                                                                                                                                                                                                                                                                    
|4.3                 | Provisions Regarding Rights of Stockholders (Incorporated
      by reference to exhibit 4.3 to the registrants Form SB-2 registration
      statement as filed on July 8, 2004)                                                                                                   
|                    |                                                                                                                                                                                                                                                                                    
|4.4                 | Form of Subscription Agreement (Incorporated by reference
      as exhibit 10.2 to the registrants Form 8-K current report as filed on
      May 2, 2008)                                                                                                                         
|                    |                                                                                                                                                                                                                                                                                    
|4.5                 | Form of Warrant (Incorporated by reference as exhibit
      10.3 to the registrants Form 8-K current report as filed on May 2,
      2008)                                                                                                                                        
|                    |                                                                                                                                                                                                                                                                                    
|4.6                 | Form of Broker Warrant (Incorporated by reference as
      exhibit 10.4 to the registrants Form 8-K current report as filed on May
      2, 2008)                                                                                                                                 
|                    |                                                                                                                                                                                                                                                                                    
|10.1                | Agreement between U.S. Geothermal Inc. and Vulcan Power
      Company dated December 3, 2002 regarding the acquisition of the Vulcan
      interest (Incorporated by reference to exhibit 10.1 to the registrants
      Form SB-2 registration statement as filed on July 8, 2004)
|                    |                                                                                                                                                                                                                                                                                    
|10.2                | Amendment No. 1 dated November 15, 2003 to Agreement
      between U.S. Geothermal Inc. and Vulcan Power Company (Incorporated by
      reference to exhibit 10.2 to the registrants Form SB-2 registration
      statement as filed on July 8, 2004)                             
|                    |                                                                                                                                                                                                                                                                                    
|10.3                | Amendment No. 2 to Agreement by and between U.S.
      Geothermal Inc. and Vulcan Power Company dated December 30, 2003
      (Incorporated by reference to exhibit 10.3to the registrant's Form SB-2 registration statement as filed on July 8,
      2004)                     

-73-

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|EXHIBIT 
    NUMBER | DESCRIPTION                                                                                                                                                                                                                                                                                                                                                                                         
|------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                    |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.4                | Geothermal Lease and Agreement dated
    July 11, 2002, between Sergene Jensen, Personal Representative of the Estate
    of Harlan B. Jensen, and U.S. Geothermal Inc. (Incorporated by reference to
    exhibit 10.5 to the registrant's Form SB-2 registration statement as filed
    on July 8, 2004)                                                                                           
|                    |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.5                | Geothermal Lease and Agreement dated June 14, 2002, between Jensen
    Investments Inc. and U.S. Geothermal Inc. (Incorporated by reference to
    exhibit 10.6 to the registrant's Form SB-2 registration statement as filed
    on July 8, 2004) Geothermal Lease and Agreement dated March 1, 2004, between
    Jay Newbold and U.S.                                                             
|                    |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.6                | Geothermal Inc. (Incorporated by
    reference to exhibit 10.7 to the registrant's Form SB-2 registration
    statement as filed on July 8, 2004)                                                                                                                                                                                                                                                   
|                    |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.7                | Geothermal Lease and Agreement dated June 28, 2003, between Janice Crank and
    thechildren of Paul Crank and U.S. Geothermal Inc. (Incorporated by
    reference to exhibit 10.8 to the registrant's Form SB-2 registration
    statement as filed on July 8, 2004)                                                                                                                               
|                    |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.8                | Geothermal Lease and Agreement dated
    December 1, 2004, between Reid S. Stewartand Ruth O. Stewart and US
    Geothermal Inc. (Incorporated by reference to exhibit 10.9 to the
    registrant's Amendment No. 2 to Form SB-2 registration statement as filed on
    January 10, 2005)                                                                                                           
|                    |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.9                | Geothermal Lease and Agreement, dated July 5, 2005, between Bighorn Mortgage
    Corporation and US Geothermal Inc. (Incorporated by reference to exhibit
    10.11 to the registrant's Form 10-QSB quarterly report as filed on February
    17, 2006)                                                                                                                                             
|                    |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.10               | Geothermal Lease and Agreement, dated
    June 23, 2005, among Dale and Ronda Doman, and US Geothermal Inc.
    (Incorporated by reference to exhibit 10.13 to the registrant's Form 10-QSB
    quarterly report as filed on February 17, 2006)                                                                                                                                                     
|                    |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.11               | Geothermal Lease and Agreement, dated June 23, 2005, among Michael and Cleo
    Griffin, Harlow and Pauline Griffin, Douglas and Margaret Griffin, Terry and
    Sue Griffin, Vincent and Phyllis Jorgensen, and Alice Mae Griffin Shorts,
    and USGeothermal Inc. (Incorporated by reference to exhibit 10.14 to the
    registrant's Form 10-QSB quarterly report as filed on February 17, 2006)
|                    |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.12               | Geothermal Lease and Agreement dated
    January 25, 2006, between Philip Glover andUS Geothermal Inc. (Incorporated
    by reference to exhibit 10.9 to the registrant's Form 10-QSB quarterly
    report as filed on February 17, 2006)                                                                                                                                                           
|                    |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.13               | Geothermal Lease and Agreement, dated May 24, 2006, between JR Land and
    Livestock Inc. and US Geothermal Inc. (Incorporated by reference to exhibit
    10.30 to the registrant's Form 10-KSB annual report as filed on June 29,
    2006)                                                                                                                                                      
|                    |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.16               | Employment Agreement dated January 1,
    2009 with Kerry D. Hawkley                                                                                                                                                                                                                                                                                                                                
|                    |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.17               | Employment Agreement dated January 1, 2009 with Douglas J. Glaspey                                                                                                                                                                                                                                                                                                                                  
|                    |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.18               | Escrow Agreement made December 19,
    2003, among U.S. Geothermal Inc., Pacific Corporate Trust Company, as escrow
    agent, and certain security holders (Incorporated by reference to exhibit
    10.15 to the registrant's Form SB-2 registration statement as filed on July
    8, 2004)                                                                                                      
|                    |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.19               | Escrow
    Agreement made December 19, 2003, among U. S. Geothermal Inc., Pacific
    Corporate Trust Company, as escrow agent, and certain security holders
    (Incorporated by reference to exhibit 10.16 to the registrant's Form SB-2
    registration statement as filed on July 8, 2004)                                                                                                     
|                    |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.21               | First Amended and Restated Merger
    Agreement dated November 30, 2003 among U.S.Cobalt Inc., EverGreen Power Inc., U.S. Geothermal Inc.,
      and the stockholders of U.S. Geothermal Inc. (Incorporated by reference to
      exhibit 10.17 to the registrants Form SB-2 registration statement as
      filed on July 8, 2004)                                                                

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|EXHIBIT 
    NUMBER | DESCRIPTION
|------------------- | -----------

|      |                                                                                                                                                                                                                                                                                                                 
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.22 | Agreement with Dundee Securities Corporation dated June
      28, 2004 (Incorporated by reference to exhibit 10.18 to the registrant's
      Form SB-2 registration statement as filed on July 8, 2004)                                                                                                         
|      |                                                                                                                                                                                                                                                                                                                 
|10.23 | Amended and Restated Stock Option Plan of U.S. Geothermal
      Inc. dated September 29, 2006.(Incorporated by reference to
      exhibit 10.23 to the registrant's Form SB-2 registration statement as
      filed on October 2, 2006.)                                                                        
|      |                                                                                                                                                                                                                                                                                                                 
|10.24 | Power Purchase Agreement dated December 29, 2004 between
      U.S. Geothermal Inc. and Idaho Power Company (Incorporated by reference to
      exhibit 10.19 to the registrant's Amendment No. 2 to Form SB-2
      registration statement as filed on January 10, 2005)                                       
|      |                                                                                                                                                                                                                                                                                                                 
|10.25 | Engineering, Procurement and Construction Agreement dated
      December 5, 2005 between U.S. Geothermal Inc. and Ormat Nevada Inc. (Incorporated by reference to exhibit
      10.28 to the registrant's Form 10-QSB quarterly report as filed on
      February 17, 2006) *                                   
|      |                                                                                                                                                                                                                                                                                                                 
|10.26 | Amendment to the Engineering, Procurement and
      Construction Agreement dated April 26, 2006 between U.S. Geothermal Inc. and Ormat
      Nevada Inc. (Incorporated by reference to exhibit 99.1 to the registrant's
      Form 8-K as filed on May 2, 2006)                                                 
|      |                                                                                                                                                                                                                                                                                                                 
|10.27 | Letter of Intent from Eugene Water and Electric Board to
      U.S. Geothermal Inc. dated February 22, 2006 (Incorporated by reference to exhibit
      10.27 to the registrants Form SB-2 as filed on September 29,
  2006).                                                                                  
|      |                                                                                                                                                                                                                                                                                                                 
|10.28 | Renewable Energy Credits Purchase and Sales Agreement
      dated July 29, 2006 between Holy Cross Energy and U.S. Geothermal Inc. (Incorporated
      by reference to exhibit 10.28 to the registrants Form SB-2 as filed on September 29,
      2006).                                                       
|      |                                                                                                                                                                                                                                                                                                                 
|10.29 | Transmission Agreement dated June 24, 2005 between
      Department of Energys Bonneville Power Administration - Transmission
      Business Line and U.S. GeothermalInc. (Incorporated by reference to
      exhibit 10.27 to the registrant's Form 10-QSB quarterly report as filed on
      August 12, 2005)
|      |                                                                                                                                                                                                                                                                                                                 
|10.30 | Interconnection and Wheeling Agreement dated March
      9, 2006 between Raft River Rural Electric Co-op and U.S. Geothermal Inc.
      (Incorporated by reference to exhibit 10.28 to the registrant's Form
      10-KSB annual report as filed on June 29, 2006)                                              
|      |                                                                                                                                                                                                                                                                                                                 
|10.31 | Construction Contract dated May 16, 2006 between Raft
      River Rural Electric Co-op and U.S. Geothermal Inc. (Incorporated by reference to
      exhibit 10.31 to the registrants Form SB-2 as filed on September 29,
      2006).                                                                          
|      |                                                                                                                                                                                                                                                                                                                 
|10.32 | Membership Admission Agreement, dated August 9, 2006,
      among Raft River Energy I LLC, U.S. Geothermal Inc., and Raft River I
      Holdings, LLC (Incorporated by reference to exhibit 10.1 to the
      registrant's Form 8-K as filed on August 23, 2006) *                                              
|      |                                                                                                                                                                                                                                                                                                                 
|10.33 | Amended and Restated Operating Agreement of
      Raft River Energy I LLC, dated as of August 9, 2006, among Raft River
      Energy I LLC, Raft River I Holdings, LLC and U.S.Geothermal Inc
      (Incorporated by reference to exhibit 10.2 to the registrant's Form 8-K as
      filed on August 23, 2006).*
|      |                                                                                                                                                                                                                                                                                                                 
|10.34 | Management
      Services Agreement, dated as of August 9, 2006, between Raft
  River Energy I LLC and U.S. Geothermal Services, LLC
      (Incorporated by reference to exhibit 10.3 to the registrants Form 8-K as filed on August 23, 2006)
      *                                                         
|      |                                                                                                                                                                                                                                                                                                                 

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|EXHIBIT
NUMBER | DESCRIPTION                                                                                                                                                                                                                                                                                                               
|-------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|               |                                                                                                                                                                                                                                                                                                                           
|10.35          | Construction contract dated May 22, 2006 between Industrial Builders and U.S. Geothermal Inc. (Incorporated by reference to exhibit 10.31 to the registrants Form 10- KSB annual report as filed on June 29, 2006)                                                                                                       
|               |                                                                                                                                                                                                                                                                                                                           
|10.36          | First Amendment to the Amended and Restated Operating Agreement of Raft River Energy I LLC, dated as of November 7, 2006, among Raft River Energy I LLC, Raft River I Holdings, LLC and U.S. Geothermal Inc. (Incorporated by reference to exhibit 10.36 to the registrants Form 10-QSB as filed on February 20, 2007). *
|               |                                                                                                                                                                                                                                                                                                                           
|10.37          | Consolidated Financial Statements of U.S. Geothermal Inc. as of March 31, 2009.                                                                                                                                                                                                                                           
|               |                                                                                                                                                                                                                                                                                                                           
|10.38          | Geothermal Lease and Agreement dated August 1, 2007, between Bureau of Land Management and U.S. Geothermal Inc. (Incorporated by reference as exhibit 10.38 to the registrants Form 10-K as filed on June 16, 2008)                                                                                                      
|               |                                                                                                                                                                                                                                                                                                                           
|10.39          | Asset Purchase Agreement dated as of March 31, 2008, between U.S. Geothermal Inc., and Empire Geothermal Power LLC and Michael B. Stewart (Incorporated by reference as exhibit 99.1 to the registrants Form 8-K current report as filed on April 7, 2008)                                                               
|               |                                                                                                                                                                                                                                                                                                                           
|10.40          | Underwriting Agreement dated April 28, 2008 between U.S. Geothermal, Inc. and Clarus Securities Inc., Toll Cross Securities Inc. and Loewen Ondaatje McCutcheon Limited (Incorporated by reference as exhibit 10.1 to the registrants Form 8-K current report as filed on May 2, 2008)                                   
|               |                                                                                                                                                                                                                                                                                                                           
|10.41          | Report of Independent Registered Public Accounting Firm                                                                                                                                                                                                                                                                   
|               |                                                                                                                                                                                                                                                                                                                           
|10.42          | Water Rights Purchase Agreement Michael B. Stewart and U.S. Geothermal Inc. dated March 31, 2008 (Incorporated by reference as exhibit 99.2 to the registrants Form 8-K current report as filed on April 7, 2008.                                                                                                         
|               |                                                                                                                                                                                                                                                                                                                           
|21.1           | Subsidiaries of the Registrant                                                                                                                                                                                                                                                                                            
|               |                                                                                                                                                                                                                                                                                                                           
|23.1           | Consent of Williams & Webster, P.S.                                                                                                                                                                                                                                                                                       
|               |                                                                                                                                                                                                                                                                                                                           
|31.1           | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                        
|               |                                                                                                                                                                                                                                                                                                                           
|31.2           | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                        
|               |                                                                                                                                                                                                                                                                                                                           
|32.1           | Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                        
|               |                                                                                                                                                                                                                                                                                                                           
|32.2           | Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                        

* - Agreements are the subject of a confidential treatment request filed with the Commission on August 23, 2006.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.

|              |  | U.S. Geothermal Inc.                 
|------------- |  | -------------------------------------
|              |  |                                      
|              |  | (Registrant)                         
|              |  |                                      
|              |  |                                      
|              |  |                                      
|June 15, 2009 |  | /s/
      Daniel J. Kunz             
|Date          |  | Daniel J. Kunz                       
|              |  | Chief Executive Officer and President
|              |  | (Principal Executive Officer)        

Pursuant to the requirements of the Securities Act of 1934,
this report has been signed by the following persons on behalf of the Registrant
in the capacities and on the date indicated:

|Name                         | Title                                                  | Date         
|---------------------------- | ------------------------------------------------------ | -------------
|                             |                                                        |              
|                             |                                                        |              
|                             | Chief Executive Officer, President and
      Director  |              
|/s/ Daniel J.
      Kunz     | (Principal Executive Officer)                          | June 15, 2009
|Daniel J. Kunz               |                                                        |              
|                             |                                                        |              
|                             | Chief Financial Officer (Principal Financial
      and |              
|/s/ Kerry
      Hawkley      | Accounting Officer)                                    | June 15, 2009
|Kerry Hawkley                |                                                        |              
|                             |                                                        |              
|/s/ Douglas J.
      Glaspey | Chief Operating Officer and Director                   | June 15, 2009
|Douglas J. Glaspey           |                                                        |              
|                             |                                                        |              
|                             |                                                        |              
|/s/ John H.
      Walker     | Chairman and Director                                  | June 15, 2009
|John H. Walker               |                                                        |              
|                             |                                                        |              
|                             |                                                        |              
|/s/ Paul A.
      Larkin     | Director                                               | June 15, 2009
|Paul A. Larkin               |                                                        |              
|                             |                                                        |              
|                             |                                                        |              
|/s/ Leland L.
      Mink     | Director                                               | June 15, 2009
|Leland R. Mink               |                                                        |              

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