Exhibit 13.1

U.S. GEOTHERMAL INC.

________

Consolidated Financial Statements (Restated)

March 31, 2009

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U.S. GEOTHERMAL INC. CONSOLIDATED BALANCE SHEETS
(RESTATED)(Stated in U.S. Dollars)

|                                                                              |   | March 31,   |   |   | March 31,   |  
|----------------------------------------------------------------------------- | - | ----------- | - | - | ----------- | -
|                                                                              |   | 2009        |   |   | 2008        |  
|                                                                              |   |             |   |   |             |  
|ASSETS                                                                        |   |             |   |   |             |  
|                                                                              |   |             |   |   |             |  
|Current:                                                                      |   |             |   |   |             |  
|Cash and cash
      equivalents                                               | $ | 3,452,091   |   | $ | 4,877,252   |  
|Restricted cash (note 6)                                                      |   | 485,000     |   |   | 285,000     |  
|Receivable from
      subsidiary                                              |   | 271,475     |   |   | 205,033     |  
|Accounts receivable, trade                                                    |   | 114,424     |   |   | -           |  
|Other current
      assets                                                    |   | 135,805     |   |   | 85,466      |  
|Total current assets                                                          |   | 4,458,795   |   |   | 5,452,751   |  
|Deposit on property acquisition (note 4)                                      |   | -           |   |   | 11,310,686  |  
|Investment in equity
      securities                                         |   | 150,169     |   |   | -           |  
|Investment in subsidiary (note 5)                                             |   | 18,501,533  |   |   | 17,110,133  |  
|Property, plant and equipment, net
      of accumulated depreciation (note 7) |   | 13,156,700  |   |   | 3,808,786   |  
|Intangible assets, net of accumulated
      amortization (note 8)             |   | 16,184,146  |   |   | 3,049,229   |  
|Total assets                                                                  | $ | 52,451,343  |   | $ | 40,731,585  |  
|                                                                              |   |             |   |   |             |  
|LIABILITIES AND STOCKHOLDERS
      EQUITY                                    |   |             |   |   |             |  
|Current Liabilities:                                                          |   |             |   |   |             |  
|Accounts payable and accrued liabilities                                      | $ | 449,559     |   | $ | 485,783     |  
|Related party
      accounts payable                                          |   | 2,491       |   |   | 9,218       |  
|Current portion of capital lease obligation                                   |   | 10,998      |   |   | -           |  
|Total current liabilities                                                     |   | 463,048     |   |   | 495,001     |  
|Long-term Liabilities:                                                        |   |             |   |   |             |  
|Capital lease
      obligation, less current portion                          |   | 38,945      |   |   | -           |  
|Stock compensation payable                                                    |   | 1,933,255   |   |   | 1,975,672   |  
|Total liabilities                                                             |   | 2,435,248   |   |   | 2,470,673   |  
|                                                                              |   |             |   |   |             |  
|Commitments and Contingencies                                                 |   | -           |   |   | -           |  
|                                                                              |   |             |   |   |             |  
|MINORITY INTEREST (note 16)                                                   |   | 678,232     |   |   | -           |  
|STOCKHOLDERS EQUITY                                                          |   |             |   |   |             |  
|Capital stock:                                                                |   |             |   |   |             |  
|Authorized:                                                                   |   |             |   |   |             |  
|250,000,000 common shares with a $0.001 par value                             |   |             |   |   |             |  
|Issued and outstanding:                                                       |   |             |   |   |             |  
|55,339,253 shares at March 31, 2008 and                                       |   |             |   |   |             |  
|62,033,882 shares at March 31,
      2009                                     |   | 62,034      |   |   | 55,339      |  
|Additional paid-in capital                                                    |   | 64,694,849  |   |   | 48,532,730  |  
|Accumulated other comprehensive
      income                                  |   | 95,891      |   |   | -           |  
|Accumulated deficit                                                           |   | (15,514,911 | ) |   | (10,327,157 | )
|Total
      stockholders equity                                              |   | 49,337,863  |   |   | 38,260,912  |  
|Total
      liabilities and stockholders equity                              | $ | 52,451,343  |   | $ | 40,731,585  |  

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

-1-

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U.S. GEOTHERMAL INC.CONSOLIDATED STATEMENTS OF
OPERATIONS ANDCOMPREHENSIVE LOSS (RESTATED)(Stated in U.S.
Dollars)

|                                                                                       |   | Years Ended March 31, |  
|-------------------------------------------------------------------------------------- | - | --------------------- | -
|                                                                                       |   | 2009                  |  
|Operating
      Revenues:                                                              |   |                       |  
|San Emidio plant
      energy sales                                                    | $ | 1,416,852             |  
|San Emidio plant energy credit sales                                                   |   | 32,437                |  
|Land, water, and
      mineral rights lease                                            |   | 97,098                |  
|Management fees                                                                        |   | 250,000               |  
|Gain from
      investment in subsidiary                                               |   | 539,815               |  
|Total operating revenues                                                               |   | 2,336,202             |  
|Operating Expenses:                                                                    |   |                       |  
|Consulting fees                                                                        |   | 121,599               |  
|Corporate
      administration and development                                         |   | 753,045               |  
|Professional and management fees                                                       |   | 997,452               |  
|Salaries and wages                                                                     |   | 1,180,647             |  
|Stock based compensation                                                               |   | 1,614,789             |  
|Travel and
      promotion                                                             |   | 511,568               |  
|San Emidio plant operations                                                            |   | 2,265,277             |  
|Land lease and
      reservation fees                                                  |   | 216,491               |  
|Total operating expenses                                                               |   | 7,660,868             |  
|Loss from Operations                                                                   |   | (5,324,666            | )
|                                                                                       |   |                       |  
|Other Income (Loss):                                                                   |   |                       |  
|Foreign exchange gain (loss)                                                           |   | (41,507               | )
|Other income
      (loss)                                                              |   | 880                   |  
|Interest income                                                                        |   | 158,771               |  
|Total other income                                                                     |   | 118,144               |  
|Net Loss Prior to
      the Allocation of Minority Interest                            |   | (5,206,522            | )
|                                                                                       |   |                       |  
|Minority interest in
      Gerlach Geothermal, LLC                                     |   | 18,768                |  
|Net Loss                                                                               |   | (5,187,754            | )
|Other Comprehensive
      Income:                                                      |   |                       |  
|Unrealized gain on
      investment in equity securities                               |   | 95,891                |  
|Comprehensive Loss                                                                     | $ | (5,091,863            | )
|                                                                                       |   |                       |  
|                                                                                       |   |                       |  
|Basic and Diluted Net Loss per Share                                                   | $ | (0.08                 | )
|                                                                                       |   |                       |  
|Weighted Average Number of Shares
      Outstanding for Basic and Diluted Calculations |   | 62,020,474            |  

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

-2-

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U.S. GEOTHERMAL INC.CONSOLIDATED STATEMENTS OF
CASH FLOWS (RESTATED)(Stated in U.S. Dollars)

|                                                             |   | For the Years Ended March 31, |  
|------------------------------------------------------------ | - | ----------------------------- | -
|                                                             |   | 2009                          |  
|                                                             |   |                               |  
|Operating
      Activities:                                  |   |                               |  
|Net loss                                                     | $ | (5,187,754                    | )
|Add non-cash items:                                          |   |                               |  
|Depreciation and amortization                                |   | 865,057                       |  
|Gain of operations of subsidiary                             |   | (539,815                      | )
|Gain
      on disposal of equipment                          |   | -                             |  
|Minority interest                                            |   | (18,768                       | )
|Unrealized foreign exchange loss                             |   | 34,237                        |  
|Shares issued for other than cash                            |   | -                             |  
|Stock based compensation                                     |   | 1,614,789                     |  
|Change in non-cash
      working capital items:              |   |                               |  
|Accounts receivable                                          |   | (180,866                      | )
|Accounts payable and accrued liabilities                     |   | 102,707                       |  
|Prepaid expenses and other assets                            |   | (50,339                       | )
|Total cash used by operating activities                      |   | (3,360,752                    | )
|                                                             |   |                               |  
|Investing
      Activities:                                  |   |                               |  
|Purchases
      of property, equipment and intangible assets |   | (21,960,096                   | )
|Cash released from (restricted by) external restrictions     |   | (200,000                      | )
|Cash
      released from escrow for property acquisition     |   | 11,310,686                    |  
|Investment in subsidiaries and equity securities             |   | (851,585                      | )
|Proceeds from equipment disposal                             |   | -                             |  
|Investment in subsidiaries and equity securities             |   | (88,515                       | )
|Total cash used by investing activities                      |   | (11,789,510                   | )
|                                                             |   |                               |  
|Financing Activities:                                        |   |                               |  
|Principal payments on capital lease obligation               |   | (3,507                        | )
|Issuance of
      share capital, net of share issue cost     |   | 13,728,608                    |  
|Total cash provided by financing activities                  |   | 13,725,101                    |  
|                                                             |   |                               |  
|Increase (Decrease)
      in Cash and Cash Equivalents       |   | (1,425,161                    | )
|                                                             |   |                               |  
|Cash and Cash
      Equivalents, Beginning of Period         |   | 4,877,252                     |  
|                                                             |   |                               |  
|Cash and Cash Equivalents, End of
      Period               | $ | 3,452,091                     |  
|                                                             |   |                               |  
|                                                             |   |                               |  
|Supplemental Disclosure:                                     |   |                               |  
|Non-cash investing and
      financing activities:           |   |                               |  
|Amendment to geothermal lease with common stock              | $ | 783,000                       |  
|Transfer of property and equipment to subsidiary             |   | -                             |  
|Shares issued with employment agreements                     |   | -                             |  
|Purchase of equipment with capital lease obligation          |   | 53,450                        |  
|Contribution of geothermal rights by minority interest       |   | 697,000                       |  
|Purchase of property and equipment on account                |   | 145,658                       |  

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

-3-

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U.S.GEOTHERMALINC.CONSOLIDATEDSTATEMENTSOFCHANGESINSTOCKHOLDERSEQUITY(RESTATED)For the Year Ended March 31, 2007(Stated in U.S. Dollars)

|                                                                                                              |  | NUMBER     |  |   |        |  |   | ADDITIONAL |   |   | CAPITAL     |   |   | STOCK      |   |   | ACCUMU-    |   |   |            |  
|------------------------------------------------------------------------------------------------------------- |  | ---------- |  | - | ------ |  | - | ---------- | - | - | ----------- | - | - | ---------- | - | - | ---------- | - | - | ---------- | -
|                                                                                                              |  | OF         |  |   | COMMON |  |   | PAID-IN    |   |   | STOCK       |   |   | PURCHASE   |   |   | LATED      |   |   |            |  
|                                                                                                              |  | SHARES     |  |   | SHARES |  |   | CAPITAL    |   |   | ISSUABLE    |   |   | WARRANTS   |   |   | DEFICIT    |   |   | TOTAL      |  
|                                                                                                              |  |            |  |   |        |  |   |            |   |   |             |   |   |            |   |   |            |   |   |            |  
|Balance
      at April 1, 2006                                                                                |  | 18,263,844 |  | $ | 18,264 |  | $ | 4,954,690  |   | $ | 20,134,260  |   | $ | -          |   | $ | (5,199,743 | ) | $ | 19,907,471 |  
|                                                                                                              |  |            |  |   |        |  |   |            |   |   |             |   |   |            |   |   |            |   |   |            |  
|Stock
      issued as result of employment agreements                                                         |  | 49,168     |  |   | 49     |  |   | 65,331     |   |   | -           |   |   | -          |   |   | 4          |   |   | 65,384     |  
|Stock options granted                                                                                         |  | -          |  |   | -      |  |   | 978,772    |   |   | -           |   |   | -          |   |   | -          |   |   | 978,772    |  
|Shares issued
      for stock options and warrants exercised                                                  |  | 497,500    |  |   | 498    |  |   | 487,595    |   |   | -           |   |   | (137,806   | ) |   | -          |   |   | 350,287    |  
|Capital stock issued as result
      of a private placement closed April 3, 2006, net of
      issuance costs |  | 25,000,000 |  |   | 25,000 |  |   | 20,109,260 |   |   | (20,134,260 | ) |   | -          |   |   | -          |   |   | -          |  
|Stock
      purchase warrants expired                                                                         |  | -          |  |   | -      |  |   | 1,186,232  |   |   | -           |   |   | (1,186,232 | ) |   | -          |   |   | -          |  
|Stock compensation
      liability                                                                            |  | -          |  |   | -      |  |   | (2,000,048 | ) |   | -           |   |   | 1,324,038  |   |   | -          |   |   | (676,010   | )
|Net loss
      for the period                                                                                 |  | -          |  |   | -      |  |   | -          |   |   | -           |   |   | -          |   |   | (1,812,945 | ) |   | (1,812,945 | )
|Balance at March 31, 2007                                                                                     |  | 43,810,512 |  | $ | 43,811 |  | $ | 25,781,832 |   | $ | -           |   | $ | -          |   | $ | (7,012,684 | ) | $ | 18,812,959 |  

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

-4-

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U.S.GEOTHERMALINC.CONSOLIDATEDSTATEMENTSOFCHANGESINSTOCKHOLDERSEQUITY(RESTATED)For the Years Ended March 31, 2008 and 2009(Stated in U.S.
Dollars)

|                                                                                                             |  | NUMBER     |   |   |        |  |   | ADDITIONAL |  |   |             |   |   | ACCUMULATED   |  |   |            |  
|------------------------------------------------------------------------------------------------------------ |  | ---------- | - | - | ------ |  | - | ---------- |  | - | ----------- | - | - | ------------- |  | - | ---------- | -
|                                                                                                             |  | OF         |   |   | COMMON |  |   | PAID-IN    |  |   | ACCUMULATED |   |   | COMPREHENSIVE |  |   |            |  
|                                                                                                             |  | SHARES     |   |   | SHARES |  |   | CAPITAL    |  |   | DEFICIT     |   |   | INCOME        |  |   | TOTAL      |  
|                                                                                                             |  |            |   |   |        |  |   |            |  |   |             |   |   |               |  |   |            |  
|Balance at April 1,
      2007                                                                               |  | 43,810,512 |   | $ | 43,811 |  | $ | 25,781,832 |  | $ | (7,012,684  | ) | $ | -             |  | $ | 18,812,959 |  
|                                                                                                             |  |            |   |   |        |  |   |            |  |   |             |   |   |               |  |   |            |  
|Capital stock issued as result
      of a private placement closed June 5, 2007, net of
      issuance costs |  | 9,090,900  |   |   | 9,091  |  |   | 17,757,681 |  |   | -           |   |   | -             |  |   | 17,766,772 |  
|Shares issued for stock options and warrants exercised                                                       |  | 2,437,841  |   |   | 2,437  |  |   | 4,255,203  |  |   | -           |   |   | -             |  |   | 4,257,640  |  
|Stock compensation
      liability                                                                           |  | -          |   |   | -      |  |   | 738,014    |  |   | -           |   |   | -             |  |   | 738,014    |  
|Net loss for the year                                                                                        |  | -          |   |   | -      |  |   | -          |  |   | (3,314,473  | ) |   | -             |  |   | (3,314,473 | )
|Balance, March 31, 2008                                                                                      |  | 55,339,253 |   |   | 55,339 |  |   | 48,532,730 |  |   | (10,327,157 | ) |   | -             |  |   | 38,260,912 |  
|                                                                                                             |  |            |   |   |        |  |   |            |  |   |             |   |   |               |  |   |            |  
|Capital stock issued as result
      of a private placement closed April 28, 2008, net of issuance costs     |  | 6,382,500  |   |   | 6,383  |  |   | 13,711,784 |  |   | -           |   |   | -             |  |   | 13,718,167 |  
|Capital stock issued for amendment to royalty agreement with the Kosmos Company                              |  | 290,000    |   |   | 290    |  |   | 782,710    |  |   | -           |   |   | -             |  |   | 783,000    |  
|Shares issued for stock
      options and warrants exercised                                                 |  | 22,134     |   |   | 22     |  |   | 10,418     |  |   | -           |   |   | -             |  |   | 10,440     |  
|Adjustment to entitlement shares from Consolidated Mango and US Cobalt stock consolidations                  |  | (5         | ) |   | -      |  |   | -          |  |   | -           |   |   | -             |  |   | -          |  
|Stock compensation
      liability                                                                           |  | -          |   |   | -      |  |   | 1,657,207  |  |   | -           |   |   | -             |  |   | 1,657,207  |  
|Unrealized gain on investment                                                                                |  | -          |   |   | -      |  |   | -          |  |   | -           |   |   | 95,891        |  |   | 95,891     |  
|Net loss for the year                                                                                        |  | -          |   |   | -      |  |   | -          |  |   | (5,187,754  | ) |   | -             |  |   | (5,187,754 | )
|                                                                                                             |  |            |   |   |        |  |   |            |  |   |             |   |   |               |  |   |            |  
|Balance at March 31,
      2009                                                                              |  | 62,033,882 |   | $ | 62,034 |  | $ | 64,694,849 |  | $ | (15,514,911 | ) | $ | 95,891        |  | $ | 49,337,863 |  

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

-5-

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U.S. GEOTHERMAL INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (RESTATED) March 31, 2009(Stated in U.S.
Dollars)

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

When U.S. Cobalt Inc. (GTH or the Company) completed a
reverse take-over on December 19, 2003, the former stockholders of U.S.
Geothermal Inc. (GEO  Idaho) a company incorporated on February 26, 2002 in
the State of Idaho, U.S.A. acquired control of GTH. In connection with the
transaction, U.S. Cobalt Inc. changed its name to U.S. Geothermal Inc. and
consolidated its common stock on a one new to five old basis. All references to
common shares in these financial statements have been restated to reflect the
rollback of common stock.

The Company was created to acquire property, construct power
plants, and manage the operations of those plants that utilize geothermal
resources to produce energy. The Companys operations have been, primarily,
focused in the Western United States of America.

These financial statements have been restated to reflect the
correction of an error to record the carrying value of our investment in the
subsidiary Raft River Energy I LLC under the hypothetical liquidation at book
value method, as further described in Note 2- Restatement f Consolidate
Financial Statements for a Correction of an Error.

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

Basis of Presentation

The Company consolidates subsidiaries that it controls
(more-than-50% owned) and entities over which control is achieved through means
other than voting rights. These consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries. The accounts of the
following companies are consolidated in these financial statements:

| | i)   | U.S. Geothermal Inc. (incorporated in the State of Delaware);      
| | ---- | -------------------------------------------------------------------
| |      |                                                                    
| | ii)  | U.S. Geothermal Inc. (incorporated in the State of Idaho);         
| |      |                                                                    
| | iii) | Gerlach Geothermal LLC (organized in the State of Delaware);       
| |      |                                                                    
| | iv)  | U.S. Geothermal Services, LLC (organized in the State of Delaware);
| |      |                                                                    
| | v)   | USG Nevada LLC (organized in the State of Delaware);               
| |      |                                                                    
| | vi)  | USG Gerlach LLC (organized in the State of Delaware); and          
| |      |                                                                    
| | vii) | U.S. Geothermal Guatemala, S.A.                                    

All intercompany transactions are eliminated upon
consolidation.

Raft River Energy I LLC, previously a 100% owned subsidiary,
was consolidated through July 2006, after which the entity is recorded as an
investment under the equity method when a new member acquired the controlling
interest in this LLC. See Note 5- Investment in Subsidiaries for further
discussion.

In cases where the Company owns a majority interest in an
entity but does not own 100% of the interest in the entity it recognizes a
minority interest. The Company will recognize 100% of the assets and liabilities
of the entity, and disclose the minoritys interest. The statements of
operations will consolidate the subsidiarys full operations, and will
separately disclose the elimination of the minoritys allocation of profits and
losses.

-6-

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NOTE 2  RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS
FOR A CORRECTION OF AN ERROR

The Companys prior accounting for its investment in Raft River
Energy I LLC, under closer review, has proved to be in error and the correction
will cause the Company to recognize additional income as described below.

The Amended and Restated Operating Agreement contains certain
complex liquidation preference provisions which require certain distributions to
each of the Members in the event that a liquidation occurs. According to the
operating agreement, upon liquidation and, after payment of all outstanding
debts, any remaining funds would be distributed to the Members in accordance to
their positive capital account balance ratio. Certain contract provisions
contain allocation of profit and loss items to arrive at the capital account
balances. Since the Company is currently the minority member recording their
investment in RREI under the equity method, we modified our allocations
utilizing the hypothetical liquidation at book value (HLBV) methodology at
each balance sheet date to value our investment. In prior reports, the
allocation has been calculated using net capital contribution ratios. Because we
have modified our approach to use the HLBV method from the inception of the RREI
entity, certain adjustments were necessary to reflect this correction of an
error in the financial statements of the Company. Changes to the financial
statements of the Company are reflected in the following table:

|               |                          |              | As Previously |           
|-------------- | ------------------------ | ------------ | ------------- | ----------
|Statement Date | Line Item                | As Restated  | Reported      | Difference
|March 31, 2009 | Investment inSubsidiary  | $ 18,501,533 | $ 17,588,888  | $ 912,645 
|               | AccumulatedDeficit       | (15,514,911) | (16,427,556)  | 912,645   
|               | Gain on
      investment | 539,815      | (8,178)       | 547,993   
|               | Net Loss                 | (5,187,754)  | (5,735,747)   | 547,993   
|               | EPS                      | $ (0.08)     | $ (0.09)      | $ 0.01    
|               |                          |              |               |           
|March 31, 2008 | Investment inSubsidiary  | $ 17,110,133 | 16,745,481    | $ 364,652 
|               | AccumulatedDeficit       | (10,327,157) | (10,691,809)  | 364,652   
|               | Gain on
      investment | 6,479        | (228,234)     | 234,713   
|               | Net Loss                 | (3,314,473)  | (3,549,186)   | 234,713   
|               | EPS                      | $ (0.06)     | (0.06)        | $ 0.00    
|               |                          |              |               |           
|March 31, 2007 | Investment inSubsidiary  | $ 6,360,349  | $ 6,230,410   | $ 129,939 
|               | AccumulatedDeficit       | (7,012,684)  | (7,142,623)   | 129,939   
|               | Gain on
      investment | (3,365)      | (133,304)     | 129,939   
|               | Net Loss                 | (1,812,945)  | (1,942,884)   | 129,939   
|               | EPS                      | $ (0.04)     | $ (0.04)      | $ 0.00    

Where necessary, throughout our financial statements and the
notes thereto, the information has been corrected to reflect the restated
amounts.

An investment in a northwest British Columbia geothermal
prospect totaling $4,965 and $4,434 for the years ended March 31, 2009 and March
31, 2008 is also recorded on the balance sheet as an investment in subsidiary in
addition to the investment in Raft River Energy I LLC.

-7-

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NOTE 3- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following are summarized accounting policies considered to
be significant by the Companys management:

Accounting Method

The Companys financial statements are prepared using the
accrual basis of accounting in accordance with accounting principles generally
accepted in the United States of America (U.S. GAAP) and have been
consistently applied in the preparation of the consolidated financial
statements.

Use of Estimates

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

Cash and Cash Equivalents

The Company considers all unrestricted cash, short-term
deposits, and other investments with original maturities of no more than ninety
days when acquired to be cash and cash equivalents for the purposes of the
statement of cash flows. Discussion regarding restricted cash is included in
Note 5. All investments held by the Company are highly liquid and available on
demand.

Trade Accounts Receivable Allowance for Doubtful
Accounts

Management estimates the amount of trade accounts receivable
that may not be collectible and records an allowance for doubtful accounts,
accordingly. The allowance is an estimate based upon aging of receivable
balances, historical collection experience, and the periodic credit evaluations
of our customers financial condition. Receivable balances are written off when
we determine that the balance is uncollectible. As of March 31, 2009, there were
no balances that were over 90 days past due and no balance in allowance for
doubtful accounts was recognized.

Concentration of Credit Risk

The Companys cash and cash equivalents, including restricted
cash, consisted of commercial bank deposits, money market accounts, and petty
cash. Cash deposits are held in a commercial bank in Boise, Idaho. The accounts
are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to
$250,000 per legal entity (after December 31, 2009, deposits will be insured up
to $100,000 per account). At March 31, 2009, the Company held deposits of
$19,620 that were not subject to FDIC insurance. The money market funds totaled
$3,464,906, and are not subject to deposit insurance.

Marketable Securities

We determine the appropriate classification of marketable
securities at the time of purchase and reevaluate this designation as of each
balance sheet date. We classify these securities as either held-to-maturity,
trading, or available-for-sale in accordance with Statement of Financial
Accounting Standards No. 115 (SFAS No. 115), Accounting for Certain
Investments in Debt and Equity Securities. As of March 31, 2009, all
marketable securities and restricted investments were classified as
available-for-sale securities. The Company classifies its investments as
available for sale because it expects to possibly sell some securities prior
to maturity. The Company's investments are subject to market risk, primarily
interest rate and credit risk. The fair value of investments is determined using
observable or quoted market prices for those securities.

-8-

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Available-for-sale securities are carried at fair value, with
unrealized gains and losses included as a component of accumulated other
comprehensive income (loss). Realized gains and losses, declines in value judged
to be other than temporary and interest on available-for-sale securities are
included in net income. The cost of securities sold is based on the specific
identification method.

Property, Plant and Equipment

Property, plant and equipment are recorded at historical cost.
Depreciation is calculated on a straight-line basis over the estimated useful
life of the asset. Where appropriate, terms of property rights and revenue
contracts can influence the determination of estimated useful lives.

The Company expenses all costs related to the development of
geothermal reserves prior to the establishment of proven and probable reserves.
Once a resource is considered to be proven, then costs of acquisition and
development are capitalized on an area-of-interest basis. If an area of interest
is subsequently abandoned, those costs are charged to income in the year of
abandonment.

Impairment of Long-Lived Assets

The Company evaluates its long-term assets annually for
impairment or when circumstances or events occur that may impact the fair value
of the assets. The fair value of geothermal property is primarily evaluated
based upon the present value of expected revenues directly associated with those
assets. An impairment loss would be recognized if the carrying amount of a
capitalized asset is not recoverable and exceeds its fair value. Management
believes that there have not been any circumstances that have warranted the
recognition of losses due to the impairment of long-lived assets as of March 31,
2009.

Stock Options Granted to Employees and
Non-employees

For stock-based compensation, the Company adopted Statement of
Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment
(SFAS 123(R)), which requires the measurement of the value of employee
services received in exchange for an award of an equity instrument based on the
grant-date fair value of the award. For employees, directors and officers, the
fair value of the awards are expensed over the vesting period. The current
vesting period for all options is eighteen months.

For non-employee stock-based compensation, the Company adopted
EITF Issue No. 96-18, Accounting for Equity Instruments That Are Issued to
Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or
Services and EITF Issue No. 00-18, Accounting Recognition for Certain
Transactions involving Equity Instruments Granted to Other Than Employees.
Non-employee stock options have been granted, at the Board of Directors
discretion, to select vendors as a bonus for exceptional performance. Prior to
issuance of the awards, the Company was not under any obligation to issue the
stock options. Subsequent to the award, the recipient was not obligated to
perform any services. Therefore, the fair value of these options was expensed on
the grant date, which was also the measurement date.

The Company accounts for stock-based compensation in accordance
with SFAS 123(R). Under the fair value recognition provisions of this statement,
share-based compensation cost is measured at the grant date based on the value
of the award and is recognized as expense over the vesting period. Determining
the fair value of share-based awards at the grant date requires judgment. In
addition, judgment is also required in estimating the amount of share-based
awards that are expected to be forfeited. If actual results differ significantly from these estimates, stock-based
compensation expense and our results of operations could be materially impacted.

-9-

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Earnings Per Share

The Company has adopted Statement of Financial Accounting
Standard No. 128 Earnings per Share (SFAS 128), which provides for
calculation of "basic" and "diluted" earnings per share. Basic earnings per
share includes no dilution and is computed by dividing net income available to
common shareholders by the weighted average common shares outstanding for the
period. Diluted earnings per share reflect the potential dilution of securities
that could share in the earnings of an entity similar to fully diluted earnings
per share. Although there were common stock equivalents outstanding at March 31,
2009 and 2008, they were not included in the calculation of earnings per share
because their inclusion would have been considered anti-dilutive.

Financial Instruments

The Companys financial instruments consist of cash and cash
equivalents, trade account and other receivables, refundable tax credits, and
accounts payable and accrued liabilities. Unless otherwise noted, it is
managements opinion that the Company is not exposed to significant interest,
currency or credit risks arising from these financial instruments. The fair
values of these financial instruments approximate their carrying values, unless
otherwise noted.

Refundable tax credit is comprised of Goods and Services Tax
(GST) which is refundable from the Government of Canada and is included in
other current assets.

The Companys functional currency is the U.S. dollar. Monetary
items are converted into U.S. dollars at the rate prevailing at the balance
sheet date. Resulting gains and losses are generally included in determining net
income for the period in which exchange rates change.

Foreign Operations

The accompanying balance sheet contains certain recorded
Company assets (principally cash) in a foreign country (Canada). Although Canada
is considered economically stable, it is always possible that unanticipated
events in Canada could disrupt the Companys operations.

Provision for Taxes

Income taxes are provided based upon the liability method of
accounting pursuant to Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes (SFAS 109). Under this approach, deferred income
taxes are recorded to reflect the tax consequences in future years of
differences between the tax basis of assets and liabilities and their financial
reporting amounts at each year-end. A valuation allowance is recorded against
deferred tax assets if management does not believe the Company has met the more
likely than not standard imposed by SFAS 109 to allow recognition of such an
asset.

At March 31, 2009, the Company had net deferred tax assets
calculated at an expected rate of 34% of approximately $3,464,000 (March 31,
2008 - $2,230,000) principally arising from net operating loss carry forwards
and stock compensation. As management of the Company cannot determine that it is
more likely than not that the Company will realize the benefit of the net
deferred tax asset, a valuation allowance equal to the net deferred tax asset
was recorded at March 31, 2009.

The significant components of the deferred tax asset at March
31, 2009 and 2008 were as follows:

-10-

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|                                                 |   | March 31,  |   |   | March 31,  |  
|------------------------------------------------ | - | ---------- | - | - | ---------- | -
|                                                 |   | 2009       |   |   | 2008       |  
|Estimated net
      operating loss carry forward | $ | 10,187,000 |   | $ | 6,559,000  |  
|                                                 |   |            |   |   |            |  
|Deferred tax asset                               | $ | 3,464,000  |   | $ | 2,230,000  |  
|Deferred tax asset valuation allowance           |   | (3,464,000 | ) |   | (2,230,000 | )
|Net deferred tax asset                           | $ | -          |   | $ | -          |  

At March 31, 2009, the Company has net operating loss carry
forwards of approximately $10,187,000 ($6,559,000 in March 31, 2008), which
expire in the years 2023 through 2027. The change in the allowance account from
March 31, 2008 to March 31, 2009 was $1,234,000.

Although we believe that our estimates are reasonable, no
assurance can be given that the final tax outcome of these matters will not be
different than that which is reflected in our tax provisions. Ultimately, the
actual tax benefits to be realized will be based upon future taxable earnings
levels, which are very difficult to predict.

Accounting for Income Tax Uncertainties and Related
Matters

We may be assessed penalties and interest related to the
underpayment of income taxes. Such assessments would be treated as a provision
of income tax expense on our financial statements. For the year ended March 31,
2009, no income tax expense has been realized as a result of our operations and
no income tax penalties and interest have been accrued related to uncertain tax
positions. The Company files income tax returns in the U.S. federal jurisdiction
and in the State of Idaho. The Company will be required to file state income tax
returns in the State of Oregon in future years. These filings are subject to a
three year statute of limitations. Our evaluation of income tax positions
included the fiscal years ended March 31, 2009, 2008, 2007 and 2006 which could
be subject to agency examinations as of March 31, 2009. No filings are currently
under examination. No adjustments have been made to reduce our estimated income
tax benefit at fiscal year end. Any valuations relating to these income tax
provisions will comply with the principles defined in Financial Accounting
Standards No. 157, Fair Value Measurements.

Revenue

Revenue Recognition

The energy sales revenue is recognized when the power is
produced and delivered to the customer under the terms defined in the Power
Purchase Agreements (PPA). Management fee income is recognized when the
services have been provided. Royalties and Lease revenues are recognized as the
resource has been utilized and other contractual obligations have been met.
Revenues from energy credits sales are recognized when the Company has met the
terms of certain energy sales agreements with a financially capable buyer and
has met the applicable governing regulations.

Revenue Source

All of the Companys direct and indirect operating revenues
originate from energy production from its interests in geothermal power plants
located in the states of Idaho and Nevada. All of the management fees and
royalty revenues are earned from its subsidiary located in South Eastern Idaho.
All of the power sales are earned from a power plant located in North Western
Nevada.

Reclassifications

Certain amounts reported in operating revenues in the fiscal
year ended March 31, 2007, were reclassified from other revenues to conform with
the current presentation. These reclassifications have resulted in no changes to
the Companys accumulated deficit and net losses presented.

-11-

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Recent Accounting Pronouncements

Hierarchy of Generally Accepted Accounting
Principles

During May 2008, the FASB issued Financial Accounting Standards
No. 162, The Hierarchy of Generally Accepted Accounting Principles No. 162(SFAS 162). SFAS 162 is intended to improve financial reporting by
identifying a consistent framework, or hierarchy, for selecting accounting
principles to be used in preparing financial statements that are presented in
conformity with U.S. generally accepted accounting principles for
nongovernmental entities. The Company does not expect the adoption of this
standard to have a direct material impact on its consolidated financial position
or consolidated results of operations.

Guaranteed Insurance Contracts

In May 2008, the FASB issued SFAS 163, Accounting for
Financial Guarantee Insurance Contracts - an interpretation of FASB Statement
No. 60 (SFAS 163). SFAS 163 is generally effective for financial
statements issued for fiscal years beginning after December 15, 2008. The
Company does not expect that SFAS 163 will have an impact on its financial
position or results of operations.

Determining Whether an Instrument (or Embedded Feature)
Is Indexed to an Entitys Own Stock

During June 2008, the FASB issued EITF Issue No. 07-5,
Determining Whether and Instrument (or an Embedded Feature) Is Indexed to an
Entitys Own Stock. EITF 07-5 provides that an entity should use a two step
approach to evaluate whether an equity-linked financial instrument (or embedded
feature) is indexed to its own stock, including evaluating the instruments
contingent exercise and settlement provisions. It also clarifies on the impact
of foreign currency denominated strike prices and market-based employee stock
option valuation instruments on the evaluation. EITF 07-5 is effective for
fiscal years beginning after December 15, 2008. The Company has not yet
determined whether this update will have a material impact on its financial
statements.

NOTE 4  ESCROW DEPOSIT ON ACQUISITION

On April 1, 2008, the Company transferred $11,310,686 to the
seller from an escrow account related to the acquisition of the geothermal
assets located in North Western Nevada.

NOTE 5  INVESTMENT IN SUBSIDIARIES

RREI resulted from an August 9, 2006 agreement between the
Company and Raft River Holdings, LLC, a subsidiary of the Goldman Sachs Group,
for construction financing of Phase I of the Raft River project. To accommodate
the construction financing, the Company sold 50% of its ownership in Raft River
Energy to Raft River Holdings, LLC. As a result of the agreements, the Company
was required to contribute cash and property sufficient to complete a 10
megawatt power plant, and Raft River Holdings was required to contribute
$34,170,100.

As of March 31, 2009, the Company has contributed $17,953,640
in cash and property to the project, while Raft River Holdings, LLC has
contributed $34,170,100.

For periods prior to August 2006, the Company was the 100%
owner of RREI and consolidated the loss. For the period August 2006 to September
2008, U.S. Geothermal Inc. recorded RREI under the equity method of accounting
for investments in subsidiaries based on the HLBV method.

Effective December 26, 2008, the fiscal year for RREI was
changed to a calendar year due to the conversion of Goldman Sachs to a bank
holding company. RREIs latest audited financial information is summarized as follows:

-12-

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|                       |   | (Unaudited)    |  |   |                |  |   |                    | 
|---------------------- | - | -------------- |  | - | -------------- |  | - | ------------------ | 
|                       |   | As of December |  |   | As of November |  |   | As of November 30, | 
|                       |   | 26, 2008       |  |   | 28, 2008       |  |   | 2007               | 
|                       |   |                |  |   |                |  |   |                    | 
|Total current assets   | $ | 1,554,044      |  | $ | 1,994,238      |  | $ | 234,382            | 
|Property and equipment |   | 49,676,148     |  |   | 50,016,779     |  |   | 50,055,675         | 
|                       | $ | 51,230,192     |  | $ | 52,011,017     |  | $ | 50,290,057         | 
|                       |   |                |  |   |                |  |   |                    | 
|Total liabilities      | $ | 500,629        |  | $ | 1,434,413      |  | $ | 4,252,786          | 
|Total members equity  |   | 50,729,563     |  |   | 50,576,604     |  |   | 46,037,271         | 
|                       | $ | 51,230,192     |  | $ | 52,011,017     |  | $ | 50,290,057         | 

|                                                |   | (Unaudited)  |  |   |                   |   |   |                   |  
|----------------------------------------------- | - | ------------ |  | - | ----------------- | - | - | ----------------- | -
|                                                |   | Month Ended  |  |   | Fiscal Year Ended |   |   | Fiscal Year Ended |  
|                                                |   | December 26, |  |   | November 28, 2008 |   |   | November 30, 2007 |  
|                                                |   | 2008         |  |   |                   |   |   |                   |  
|                                                |   |              |  |   |                   |   |   |                   |  
|Operating revenues                              | $ | 538,309      |  | $ | 4,880,303         |   | $ | 96,743            |  
|Operating loss                                  |   | 152,483      |  |   | (528,916          | ) |   | (929,615          | )
|Net loss                                        |   | 152,960      |  |   | (448,593          | ) |   | (834,234          | )
|                                                |   |              |  |   |                   |   |   |                   |  
|U.S. Geothermal Inc., portion
      of net loss | $ | 37,089       |  | $ | 406,222           |   | $ | (8,342            | )

RREI began commercial operations on January 3, 2008. Due to
start up issues, RREI experienced an operating loss for the fiscal year ended
November 28, 2008. RREI reported net income of $412,169 for the last six months
ended March 27, 2009.

Raft River Energy I is a joint venture between the Company and
Raft River I Holdings, LLC a subsidiary of Goldman Sachs Group, Inc. An
Operating Agreement governs the rights and responsibilities of both parties.
Raft River Energy I is a voting interest entity recorded on the financial
records of the Company as an equity investment. For book and income tax
purposes, Raft River I Holdings, LLC will receive a greater proportion of the
share of losses and other income tax benefits. During the initial years of
operations Raft River I Holdings, LLC will receive a larger allocation of cash
distributions. The Companys investment in the Raft River Energy I entity has
changed since March 31, 2006 as follows:

|Year ended   | Activity                   | Increase (Decrease) in Investment
|------------ | -------------------------- | ---------------------------------
|March31,2006 | Investment Account Balance | 883,437                          
|             | Capital Contributions      | 5,480,277                        
|             | Allocation of profit/loss  | (3,365)                          
|March31,2007 | Investment Account Balance | 6,360,349                        
|             | Capital Contributions      | 10,641,871                       
|             | Allocation of profit/loss  | 6,479                            
|             | Prepaid amount             | 97,000                           
|March31,2008 | Investment Account Balance | 17,105,699                       
|             | Capital Contributions      | 948,054                          
|             | Allocation of profit/loss  | 539,815                          
|             | Prepaid amount             | (97,000)                         
|March31,2009 | Investment Account Balance | 18,496,568                       

-13-

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An investment in a northwest British Columbia geothermal
prospect totaling $4,965 and $4,434 for the years ended March 31, 2009 and March
31, 2008 is also recorded on the balance sheet as an investment in
subsidiary.

NOTE 6  RESTRICTED CASH

The Company maintains cash balances that are restricted under
Letter of Credit covenants for State and Federal well bonding requirements.
These bonds renew on an annual basis. Restricted cash balances and explanations
of the nature of the restrictions are summarized as follows:

|                                                                                                |   | March 31, | 
|----------------------------------------------------------------------------------------------- | - | --------- | 
|State Agency                                                                                    |   | 2009      | 
|                                                                                                |   |           | 
|Idaho Department of Water
      Resources, Geothermal Well Bond                                 | $ | 260,000   | 
|State of Nevada Division of Minerals,
      Statewide Drilling Bond                             |   | 50,000    | 
|Bureau of Land
      Management, Geothermal Lease Bonds                                         |   | 150,000   | 
|Oregon Department of Geology and Mineral
      Industries, Mineral Land and Reclamation Program |   | 25,000    | 
|                                                                                                |   |           | 
|                                                                                                | $ | 485,000   | 

These bonding requirements ensure that the Company has
sufficient financial resources to construct, operate & maintain geothermal
wells while safeguarding subsurface, surface and atmospheric resources from
unreasonable degradation, and to protect ground water aquifers and surface water
sources from contamination. Other future costs of environmental remediation
cannot be reasonably estimated and have not been recorded.

NOTE 7 - PROPERTY, PLANT AND EQUIPMENT

Effective May 1, 2008, the Company acquired a production plant
and wells located in the San Emidio Desert area north of Reno, Nevada for
approximately $4.5 million from Empire Geothermal Power LLC and Michael B.
Stewart. The power plant is comprised of four binary cycle units, a wet cooling
tower and nine geothermal wells developed in a proven geothermal reservoir. The
Company began the expansion of the San Emidio well field with drilling
activities that totaled over $1.9 million. The San Emidio well project was still
under construction at March 31, 2009.

Construction costs at our project located near Neal Hot
Springs, Oregon totaled approximately $2.2 million.

Significant purchases of vehicle furniture and equipment
included 3 light trucks, a flow rate separator tank and a rough terrain forklift
that amounted to $72,676, $65,415 and $53,450; respectively.

As described in note 14, the Company contributed $300,000 in
geothermal and mineral rights to a newly formed company, and the other partner
contributed $697,000 in geothermal leases and mineral rights.

Property, plant and equipment categories are summarized as
follows:

-14-

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|                                              |   | March 31,  |  
|--------------------------------------------- | - | ---------- | -
|                                              |   | 2009       |  
|                                              |   |            |  
|Land                                          | $ | 384,000    |  
|Power production plant and
      improvements |   | 1,329,527  |  
|Wells                                         |   | 3,617,312  |  
|Vehicles, furniture and equipment             |   | 704,887    |  
|                                              |   | 6,035,726  |  
|Less: accumulated depreciation                |   | (686,471   | )
|                                              |   | 5,349,255  |  
|Construction in progress                      |   | 7,807,445  |  
|                                              |   |            |  
|                                              | $ | 13,156,700 |  

The construction in progress consists of development activities
at Raft River Unit II, Idaho, Neal Hot Springs, Oregon and San Emidio, Nevada.

Depreciation expense was charged to operations for the years
ended March 31, 2009, 2008 and 2007 amounted to $865,057, $56,769 and $16,511;
respectively.

NOTE 8  INTANGIBLE ASSETS

During the year ended March 31, 2009, the Company acquired
28,358 acres of geothermal energy leases and certain ground water rights from
Empire Geothermal Power LLC and Michael B. Stewart for approximately $12.1
million. These geothermal energy leases and ground water rights are all located
north of Reno, Nevada. Intangible assets are summarized as follows:

|                               |   | March 31,  |  
|------------------------------ | - | ---------- | -
|                               |   | 2009       |  
|                               |   |            |  
|Surface water rights           | $ | 4,766,341  |  
|Geothermal water rights        |   | 11,670,371 |  
|                               |   | 16,436,712 |  
|Less: accumulated amortization |   | (252,566   | )
|                               | $ | 16,184,146 |  

Amortization expense was charged to operations for the years
ended March 31, 2009, 2008 and 2007 amounted to $252,566, $0 and $0;
respectively.

NOTE 9 - CAPITAL LEASE OBLIGATION

Effective November 10, 2008, the Company entered into a capital
lease obligation for the purchase of a forklift that is payable in monthly
payments of $1,193 including interest to Wells Fargo Equipment, Inc. The
contract includes a purchase option of $5,345 at the end of the lease term
scheduled for November 2012. The calculated interest rate was 7.37% per annum.
The schedule of minimum lease payments is as follows:

-15-

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|Period Ended March 31, |   | Principal |  |   | Interest |  |   | Totals | 
|---------------------- | - | --------- |  | - | -------- |  | - | ------ | 
|                       |   |           |  |   |          |  |   |        | 
|2010                   | $ | 10,998    |  | $ | 3,318    |  | $ | 14,316 | 
|2011                   |   | 11,837    |  |   | 2,479    |  |   | 14,316 | 
|2012                   |   | 12,736    |  |   | 1,580    |  |   | 14,316 | 
|2013                   |   | 14,372    |  |   | 517      |  |   | 14,889 | 
|                       | $ | 49,943    |  | $ | 7,894    |  | $ | 57,837 | 

NOTE 10 - CAPITAL STOCK

The Company is authorized to issue 250,000,000 shares of common
stock. All shares have equal voting rights, are non-assessable and have one vote
per share. Voting rights are not cumulative and, therefore, the holders of more
than 50% of the common stock could, if they choose to do so, elect all of the
directors of the Company.

During the quarter ended March 31, 2009, the Company verified
an adjustment of 5 shares required for entitlement shares to be issued for the
stock consolidations of Consolidated Mango (1999) and US Cobalt (2003) shares.
These shares remain in escrow until the Consolidated Mango and US Cobalt shares
are redeemed for U.S. Geothermal Inc. common shares.

During the quarter ended December 31, 2008, the Company issued
22,134 common shares to an officer of the Company upon exercise of stock options
at a strike price of $0.60 CDN.

During the quarter ended June 30, 2008, the Company entered
into an agreement with a Canadian investment dealer, in which an underwriter
agreed to purchase 4,260,000 units of the Companys equity interests. Each unit
comprised one common share of the Companys stock and one half of one common
share purchase warrant. The initial offering, completed on April 28, 2008,
generated gross proceeds $10,011,000 CDN (approximately $10,154,458) at a price
of $2.35 CDN per share. Each warrant will entitle the holder the right to
acquire one additional common share of the Company for a period of 24 months
following the closing of the offering for $3.00 per share. In addition, the
Underwriters exercised their option to purchase an additional 2,122,500 units at
the issue price of the offering, resulting in the issuance of a total of
6,382,500 units for aggregate gross proceeds of approximately $15 million
CDN.

During the quarter ended June 30, 2008, the Company issued
290,000 common shares at a price of $2.70 per share to the Kosmos Company in
exchange for a favorable amendment to the existing royalty agreement. The
royalty agreement is applicable to the operations of the newly acquired San
Emidio plant.

During the quarter ended March 31, 2008, the Company issued
56,667 common shares to officers, employees and consultants upon exercise of
stock options at strike prices ranging from $0.72 CDN to $0.90 CDN (average
$0.92).

During the quarter ended December 31, 2007, the Company issued
1,854,141 common shares upon the exercise of 222,550 stock options and 1,631,591
broker compensation options in both U.S. and Canadian dollars. Shares of 15,000
were issued at an exercise price of $2.41. Shares of 1,680,050 were issued at
exercise prices that ranged between $0.61 to $1.02 ($0.60 to $1.00 CDN). Shares
issued from stock purchase warrants, amounted to 159,091 shares at an exercise
price of $2.08.

-16-

---

During the quarter ended December 31, 2007, the Company issued
235,833 common shares to officers, employees and consultants upon exercise of
stock options at strike prices ranging from $0.60 CDN to $1.40 CDN (average
$1.03).

NOTE 11 - STOCK BASED COMPENSATION

The Company has a stock option plan (the Stock Option Plan)
for the purpose of attracting and motivating directors, officers, employees and
consultants of the Corporation and advancing the interests of the Corporation.
The Stock Option Plan is a 10% rolling plan approved by shareholders in
September 2006, whereby the Company can grant options to the extent of 10% of
the current outstanding common shares. Under the plan, all forfeited and
exercised options can be replaced with new offerings. As of March 31, 2009, the
Company can issue stock option grants totaling up to 6,203,388 shares. Options
are granted for a term of up to five years from the date of grant. Stock options
granted generally vest over a period of eighteen months, with 25% vesting on the
date of grant and 25% vesting every six months thereafter. Effective April 1,
2007, all grants will be stated in U.S. dollars. The Company recognizes
compensation expense using the straight-line method of amortization.
Historically, the Company has issued new shares to satisfy exercises of stock
options and the Company expects to issue new shares to satisfy any future
exercises of stock options. At March 31, 2009, the Company had 4,239,250 options
granted and outstanding.

During the quarter ended March 31, 2009, Company stock options
of 188,494 granted to employees and consultants exercisable at a price of $0.60
CDN expired without exercise.

During the quarter ended September 30, 2008, the Company
granted 95,000 stock options to employees exercisable at a price of $1.78 until
August 9, 2013.

During the quarter ended June 30, 2008, the Company granted
1,505,000 stock options to consultants and employees exercisable at a price of
$2.22 until May 19, 2013.

During the quarter ended September 30, 2007, the Company
granted 775,000 stock options to consultants and employees exercisable at a
price of $2.41 until January 22, 2012.

The following table reflects the summary of stock options
outstanding at March 31, 2007 and changes during the years ended March 31, 2008
and 2009:

-17-

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|                                          |  |              |   |   | Weighted       |  |   | Weighted |  |   |           |  
|----------------------------------------- |  | ------------ | - | - | -------------- |  | - | -------- |  | - | --------- | -
|                                          |  |              |   |   | Average        |  |   | Average  |  |   | Aggregate |  
|                                          |  | Number of    |   |   | Exercise       |  |   | Fair     |  |   | Intrinsic |  
|                                          |  | shares under |   |   | Price Per      |  |   | Value    |  |   | Value     |  
|                                          |  | options      |   |   | Share          |  |   | (US)     |  |   | (US)      |  
|                                          |  |              |   |   |                |  |   |          |  |   |           |  
|Balance outstanding,
      March 31, 2006 |  | 1,065,628    |   | $ | 0.69
      CDN |  | $ | 0.37     |  | $ | 399,146   |  
|Forfeited                                 |  | (145,000     | ) |   | 0.86 CDN       |  |   | 0.62     |  |   | (90,487   | )
|Exercised                                 |  | (152,500     | ) |   | 0.63 CDN       |  |   | 0.30     |  |   | (46,427   | )
|Granted                                   |  | 2,168,000    |   |   | 1.05 CDN       |  |   | 0.99     |  |   | 2,140,719 |  
|Balance outstanding,
      March 31, 2007 |  | 2,936,128    |   | $ | 0.96
      CDN |  | $ | 0.82     |  | $ | 2,402,951 |  
|                                          |  |              |   |   |                |  |   |          |  |   |           |  
|Forfeited                                 |  | (5,000       | ) |   | 1.00 CDN       |  |   | 0.80     |  |   | (4,000    | )
|Exercised                                 |  | (806,250     | ) |   | 0.83 CDN       |  |   | 0.63     |  |   | (511,494  | )
|Granted                                   |  | 775,000      |   |   | 2.41           |  |   | 1.95     |  |   | 1,513,964 |  
|Balance outstanding, March 31, 2008       |  | 2,899,878    |   |   | 1.35 CDN       |  |   | 1.17     |  |   | 3,401,421 |  
|Forfeited                                 |  | (238,494     | ) |   | 0.98           |  |   | 0.63     |  |   | (151,013  | )
|Exercised                                 |  | (22,134      | ) |   | 0.60 CDN       |  |   | 0.28     |  |   | (6,093    | )
|Granted                                   |  | 1,600,000    |   |   | 2.19           |  |   | 1.22     |  |   | 1,952,000 |  
|Balance outstanding, March 31, 2009       |  | 4,239,250    |   | $ | 1.62           |  | $ | 1.23     |  | $ | 5,196,315 |  

The fair value of each option award is estimated on the date of
grant using the Black-Scholes option-pricing model using the assumptions noted
in the following table. Expected volatilities are based on historical volatility
of the Companys stock. The Company uses historical data to estimate option
volatility within the Black-Scholes model. The expected term of options granted
represents the period of time that options granted are expected to be
outstanding, based upon past experience and future estimates and includes data
from the Plan. The risk-free rate for periods within the expected term of the
option is based upon the U.S. Treasury yield curve in effect at the time of
grant. The Company currently does not foresee the payment of dividends in the
near term.

The fair value of the stock options granted was estimated using
the Black-Scholes option-pricing model and is amortized over the vesting period
of the underlying options. The assumptions used to calculate the fair value are
as follows:

|                              |  |            |  |  | Year Ended March 31, |  |  |           | 
|----------------------------- |  | ---------- |  |  | -------------------- |  |  | --------- | 
|                              |  | 2009       |  |  | 2008                 |  |  | 2007      | 
|                              |  |            |  |  |                      |  |  |           | 
|Dividend
      yield          |  | 0          |  |  | 0                    |  |  | 0         | 
|Expected volatility           |  | 71-82%     |  |  | 77-140%              |  |  | 82-149%   | 
|Risk free
      interest rate |  | 1.74-2.23% |  |  | 1.74-5.10%           |  |  | 3.94-4.2% | 
|Expected life (years)         |  | 3.25       |  |  | 3.18                 |  |  | 3.36      | 

Changes in the subjective input assumptions can materially
affect the fair value estimate and, therefore, the existing models do not
necessarily provide a reliable measure of the fair value of the Companys stock
options.

The following table summarizes information about the stock
options outstanding at March 31, 2009:

-18-

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|OPTIONS OUTSTANDING |           |             
|------------------- | --------- | ------------
|                    |           | REMAINING   
|EXERCISE            | NUMBER OF | CONTRACTUAL 
|PRICE               | OPTIONS   | LIFE (YEARS)
|                    |           |             
|$ 0.72CDN           | 12,500    | 0.58        
|0.90CDN             | 237,500   | 0.58        
|1.00CDN             | 1,443,000 | 2.00        
|1.15CDN             | 78,750    | 2.33        
|1.40CDN             | 157,500   | 2.83        
|1.78                | 95,000    | 4.48        
|2.22                | 1,505,000 | 4.12        
|2.41                | 710,000   | 3.33        
|                    |           |             
|$ 1.62              | 4,239,250 | 2.98        

The weighted average exercise price and remaining contractual
term of options currently exercisable as of March 31, 2009 are $1.48 and 2.72
years; respectively.

The following table summarizes information about the stock
options outstanding at March 31, 2008:

|OPTIONS OUTSTANDING |           |             
|------------------- | --------- | ------------
|                    |           | REMAINING   
|EXERCISE            | NUMBER OF | CONTRACTUAL 
|PRICE               | OPTIONS   | LIFE (YEARS)
|                    |           |             
|$ 0.60CDN           | 210,628   | 0.83        
|0.72CDN             | 67,500    | 1.58        
|0.85CDN             | 20,000    | 3.00        
|0.90CDN             | 182,500   | 1.58        
|1.00CDN             | 1,423,000 | 3.00        
|1.15CDN             | 78,750    | 3.33        
|1.40CDN             | 157,500   | 3.83        
|2.41                | 760,000   | 4.33        
|                    |           |             
|$ 1.35CDN           | 2,899,878 | 3.12        

The weighted average exercise price and remaining contractual
term of options currently exercisable as of March 31, 2008 are $1.19CDN and 2.93
years; respectively.

A summary of the status of the Companys nonvested stock
options outstanding at March 31, 2007 and changes during the fiscal years ended
March 31, 2008 and 2009 are presented as follows:

-19-

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|                                |             | Weighted        | Weighted  
|------------------------------- | ----------- | --------------- | ----------
|                                |             | Average Grant   | Average   
|                                | Number of   | Date Fair Value | Grant Date
|                                | Options     | Per Share       | Fair Value
|                                |             |                 |           
|Nonvested, March 31,
      2006 | 142,500     | $ 0.69CDN       | $ 0.37    
|Granted                         | 2,168,000   | 1.05CDN         | 0.54      
|Vested                          | (1,094,000) | 0.63CDN         | 0.29      
|Forfeited                       | (145,000)   | 0.86CDN         | 0.62      
|Nonvested, March 31,
      2007 | 1,071,500   | 0.96CDN         | 0.82      
|                                |             |                 |           
|Granted                         | 775,000     | 2.41            | 1.54      
|Vested                          | (1,422,125) | 2.15            | 1.37      
|Forfeited                       | (5,000)     | 1.00CDN         | 0.80      
|Nonvested, March 31, 2008       | 419,375     | 1.12CDN         | 1.43      
|Granted                         | 1,600,000   | 2.19            | 1.22      
|Vested                          | (980,881)   | 2.25            | 1.26      
|Forfeited                       | (238,494)   | 0.98            | 0.63      
|Nonvested, March 31, 2009       | 800,000     | $ 2.19          | $ 1.20    

As of March 31, 2009, there was $546,134 of total unrecognized
compensation cost related to nonvested share-based compensation arrangements
granted under the Plan. That cost is expected to be recognized over a
weighted-average period of 1.5 years. The total fair value of shares vested at
March 31, 2009 and 2008 was $1,614,789 and $1,903,635; respectively.

Stock Purchase Warrants

At March 31, 2009, broker warrants at an exercise price of
$2.34 totalled 191,475 and share purchase warrants at an exercise price of $3.00
remained outstanding. These warrants expire April 28, 2010.

During the quarter ended December 31, 2008, 295,454 broker
warrants at an exercise price of $2.08 expired without exercise.

During the quarter ended June 30, 2008, the Company issued
191,475 broker warrants at an exercise price of $2.34 and 3,191,250 share
purchase warrants at an exercise price of $3.00 as part of the private placement
of 6,382,500 common shares completed April 28, 2008.

At June 30, 2007, 454,545 share purchase warrants at an
exercise price of $2.08 were issued to compensate brokers resulting from the
private placement of 9,090,900 common shares issued June 5, 2007. During the
quarter ended December 31, 2007, stock purchase warrants representing 159,091
common shares at an exercise price of $2.08 were exercised.

NOTE 12  FAIR VALUE MEASUREMENT

On April 1, 2008, the Company adopted the provisions of SFAS
No. 157 related to its financial assets and liabilities measured at fair value
on a recurring basis. SFAS No. 157 establishes a fair value hierarchy that
prioritizes the inputs used to measure fair value. The hierarchy gives the
highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities (Level 1 measurement) and the lowest priority to
unobservable inputs (Level 3 measurement).

The three levels of the fair value hierarchy defined by SFAS
No. 157 are as follows:

-20-

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Level 1  Quoted prices are available
in active markets for identical assets or liabilities. Active markets are those
in which transactions for the asset or liability occur with sufficient frequency
and volume to provide pricing information on an ongoing basis.

Level 2  Pricing inputs are other than
quoted prices in active markets included in Level 1, which are either directly
or indirectly observable as of the reporting date. Level 2 includes those
financial instruments that are valued using models or other valuation
methodologies. These models are primarily industry-standard models that consider
various assumptions, including quoted forward prices for commodities, time
value, volatility factors, and current market and contractual prices for the
underlying instruments, as well as other relevant economic measures.
Substantially all of these assumptions are observable in the marketplace
throughout the full term of the instrument, can be derived from observable data
or are supported by observable levels at which transactions are executed in the
marketplace.

Level 3  Pricing inputs include
significant inputs that are generally unobservable from objective sources. These
inputs may be used with internally developed methodologies that result in
managements best estimate of fair value. Level 3 instruments include those that
may be more structured or otherwise tailored to the Companys needs.

As required by SFAS No. 157, financial assets and liabilities
are classified in their entirety based on the lowest level of input that is
significant to the fair value measurement. The Companys assessment of the
significance of a particular input to the fair value measurement requires
judgment, and may affect the valuation of fair value assets and liabilities and
their placement within the fair value hierarchy levels.

The following table discloses by level within the fair value
hierarchy the Companys assets and liabilities measured and reported on the
Consolidated Balance Sheet as of March 31, 2009 at fair value on a recurring
basis:

|                                |   | Total     |  |   | Level 1   |  |   | Level 2 |  |   | Level 3 | 
|------------------------------- | - | --------- |  | - | --------- |  | - | ------- |  | - | ------- | 
|Assets:                         |   |           |  |   |           |  |   |         |  |   |         | 
|Money market accounts           | $ | 3,464,906 |  | $ | 3,464,906 |  | $ | -       |  | $ | -       | 
|Investment in equity securities |   | 150,169   |  |   | -         |  |   | -       |  |   | 150,169 | 
|                                | $ | 3,615,075 |  | $ | 3,464,906 |  | $ | -       |  | $ | 150,169 | 

On December 14, 2007 the FASB issued a proposed FASB staff
position ("FSP") that would amend SFAS 157 to delay its effective date for all
non-financial assets and non-financial liabilities, except for those that are
recognized or disclosed at fair value in the financial statements on a recurring
basis, that is, at least annually. For items within the scope of the proposed
FSP the effective date of SFAS 157 would be delayed to fiscal years beginning
after November 15, 2008 (fiscal 2010 for the Company) and interim periods within
those fiscal years. During February 2008, the FASB confirmed and made effective
the FSP. The Company has chosen not to implement SFAS 157 for non-financial
assets and non-financial liabilities at this time.

Changes in level 3 assets measured at fair value on a recurring
basis for the year ended March 31, 2009:

|                                                             |   | Amounts |  
|------------------------------------------------------------ | - | ------- | -
|Investment in
      equity securities:                       |   |         |  
|Balance at March 31, 2008                                    | $ | -       |  
|Purchases                                                    |   | 88,515  |  
|Realized
      gains/losses                                  |   | -       |  
|Foreign exchange loss                                        |   | (34,237 | )
|Unrealized gain
      included in other comprehensive income |   | 95,891  |  
|Balance at March 31,
      2009                              | $ | 150,169 |  

-21-

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The equity securities purchased in June 2008 are not actively
traded on a stock exchange. The change in value was calculated based on a
subsequent private placement of the securities in January 2009 which reflected
an increased market price for the securities.

NOTE 13 - RELATED PARTY TRANSACTIONS

At March 31, 2009 and 2008, the amounts of $2,491 and $9,218;
respectively, are payable to directors and officers of the Company. These
amounts are unsecured and due on demand.

The Companys subsidiary Raft River Energy I, LLC owed the
Company $271,475 and $205,033 at March 31, 2009 and 2008; respectively, for
operating and maintenance expenses. The receivable balance is comprised of
unsecured demand obligations due within twelve months. During the year ended
March 31, 2009 and 2008, the Company received the following fees from RREI:

|                    |   | Years Ended March 31, | 
|------------------- | - | --------------------- | 
|                    |   | 2009                  | 
|Management fees     | $ | 250,000               | 
|Lease and royalties |   | 97,098                | 
|                    | $ | 347,098               | 

The Company incurred the following transactions with directors,
officers and a company with a common director:

|                              |   | Years Ended March 31, | 
|----------------------------- | - | --------------------- | 
|                              |   | 2009                  | 
|Administrative
      services | $ | -                     | 
|Director fees                 |   | 60,000                | 
|Consulting fees               |   | -                     | 
|                              | $ | 60,000                | 

NOTE 14 - DIFFERENCES BETWEEN CANADIAN AND U.S. GAAP

The Companys consolidated financial statements have been
prepared in accordance with U.S. generally accepted accounting principles (U.S.
GAAP). The material difference in respect to these financial statements between
U.S. GAAP and Canadian GAAP is reflected in the recording of Property, Plant and
Equipment. Under Canadian GAAP, development and exploration costs associated
with the Raft River project (property lease payments, geological consulting
fees, well monitoring and permitting, etc.) were recorded as a capital asset.
Under U.S. GAAP, these amounts are expensed.

As a result of the above, under Canadian GAAP the following
line items in the consolidated balance sheets and income statements would have
been presented as follows:

-22-

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|                                           |   |            |   |   |             |   |   |            |   |   |             |  
|------------------------------------------ | - | ---------- | - | - | ----------- | - | - | ---------- | - | - | ----------- | -
|                                           |   |            |   |   | Canadian    |   |   |            |   |   |             |  
|Consolidated
      Balance                 |   | U.S. GAAP  |   |   | GAAP        |   |   | U.S. GAAP  |   |   | Canadian    |  
|Sheets                                     |   | March 31,  |   |   | March 31,   |   |   | March 31,  |   |   | GAAP March  |  
|                                           |   | 2009       |   |   | 2009        |   |   | 2008       |   |   | 31, 2008    |  
|                                           |   |            |   |   |             |   |   |            |   |   |             |  
|Plant, Property and Equipment              | $ | 29,340,846 |   | $ | 29,781,457  |   | $ | 6,858,015  |   | $ | 7,298,626   |  
|Total Assets                               |   | 52,451,343 |   |   | 52,891,954  |   |   | 40,731,585 |   |   | 41,172,196  |  
|Stockholders Equity                       |   | 49,337,863 |   |   | 49,778,474  |   |   | 38,260,912 |   |   | 38,880,483  |  
|Total Liabilities and Stockholders Equity | $ | 52,451,343 |   | $ | 52,891,954  |   | $ | 40,731,585 |   | $ | 41,172,196  |  
|                                           |   |            |   |   |             |   |   |            |   |   |             |  
|                                           |   |            |   |   |             |   |   |            |   |   |             |  
|Consolidated
      Statements              |   | U.S. GAAP  |   |   | Canadian    |   |   | U.S. GAAP  |   |   | Canadian    |  
|of Operations
      and                    |   | Year Ended |   |   | GAAP Year   |   |   | Year ended |   |   | GAAP Year   |  
|Comprehensive Loss                         |   | March 31,  |   |   | Ended March |   |   | March 31,  |   |   | ended March |  
|                                           |   | 2009       |   |   | 31, 2009    |   |   | 2008       |   |   | 31, 2008    |  
|Loss from Operations                       | $ | (5,324,666 | ) | $ | (5,324,666  | ) | $ | (4,378,150 | ) | $ | (4,378,150  | )
|Net Loss                                   | $ | (5,187,754 | ) | $ | (5,187,754  | ) | $ | (3,314,473 | ) | $ | (3,314,473  | )

NOTE 15 - COMMITMENTS AND CONTINGENCIES

Operating Lease Agreements

The Company has entered into several lease agreements with
terms expiring up to December 1, 2034 for geothermal properties adjoining the
Raft River Geothermal Property and for Neal Hot Springs. The Company incurred
total lease expenses for year ended March 31, 2009, 2008, and 2007 totaled
$108,185, $100,128 and $28,698; respectively.

BLM Lease Agreements

Idaho

On August 1, 2007, the Company signed a geothermal resources
lease agreement with the United States Department of the Interior Bureau of Land
Management (BLM). The contract requires an annual payment of $3,502 including
processing fees. The primary term of the agreement is 10 years. After the
primary term, the Company has the right to extend the contract. BLM has the
right to terminate the contract upon written notice if the Company does not
comply with the terms of the agreement.

San Emidio

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.

Gerlach

The Gerlach Geothermal LLC assets are comprised of 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
Minerals Management Service (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.

-23-

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Granite Creek

The Company has three geothermal lease contracts with the BLM
for the Granite Creek properties. The lease contracts are for approximately
5,414 acres of land and geothermal water rights located in North Western 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.

Office Lease

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.

The following is the total contracted lease obligations for the
next five fiscal years:

Years EndingMarch 31,
    Amount2010
    $ 143,3772011
    134,2582012
    74,7132013
    49,1032014
    46,599Thereafter
    98,791


Power Purchase Agreements

The Company has signed a power purchase agreement with Idaho
Power Company for sale of power generated from its subsidiary Raft River Energy
I, LLC. The Company has also signed a transmission agreement with Bonneville
Power Administration for transmission of the electricity from this plant to
Idaho Power, and from the phase two plants to other purchasers. These agreements
will govern the operational revenues for the initial phases of the Companys
operating activities.

The Company signed a power purchase agreement on March 12, 2008
with Eugene Water and Electric Board for the planned phase two power plant at
Raft River, Idaho. The agreement allows for variable output up to a maximum of
16 megawatts with a term of 25 years. The agreement is subject to successful
drilling and resource development.

As a part of the purchase of the assets from Empire Geothermal
Power, LLC and Michael B. Stewart acquisition (Empire Acquisition), a power
purchase agreement with Sierra Pacific Power Company was assigned to the
Company. The contract has a stated expected output of 3,250 kilowatts maximum
per hour and extends through 2017. All power produced will be purchased and
there are no penalties for not meeting or exceeding expected output levels.

Construction Contract

On December 5, 2005, the Company signed a contract (the Ormat
EPC Agreement) with Ormat Nevada, Inc. (Ormat) for Ormat to construct a 13
megawatt geothermal power plant at Raft River, Idaho. As part of the Agreement,
Ormat has guaranteed certain performance specifications and plant components. As
of March 31, 2009, the Company retains $75,000 for release to Ormat upon Ormats
completion of certain punch list items, namely, the repairs to the grounding
grid and the reduction of the oversplash of water in the cooling tower. As a
result of negotiations, Ormat issued a credit of $200,000 against an outstanding
invoice.

-24-

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The Company paid the net amount due less the $200,000 and
$75,000 retainage to secure release of a lien on the project filed by Ormat.

NOTE 16  JOINT VENTURES

Raft River Energy I LLC

Raft River Energy I is a joint venture between the Company and
Raft River I Holdings, LLC a subsidiary of Goldman Sachs Group, Inc. An
Operating Agreement governs the rights and responsibilities of both parties. At
fiscal year end, the Company had contributed approximately $17.9 million in cash
and property, and Raft River I Holdings, LLC has contributed approximately $34
million in cash. Profits and losses are allocated to the members based upon
hypothetical liquidation at book value method. For income tax purposes, Raft
River I Holdings, LLC will receive a greater proportion of the share of losses
and other income tax benefits. This includes the allocation of production tax
credits, which will be distributed 99% to Raft River I Holdings, LLC and 1% to
the Company during the first 10 years of production. During the initial years of
operations Raft River I Holdings, LLC will receive a larger allocation of cash
distributions. During the initial term of the agreement, the Company accounts
for its investment in this LLC under the equity method as a voting interest
entity.

Gerlach Geothermal LLC

On April 28, 2008, the Companyformed Gerlach
Geothermal, LLC (Gerlach) with our partner,Gerlach Green Energy, LLC
(GGE). The purpose of the joint venture is the exploration of the Gerlach
geothermal system, which is located in northwestern Nevada, near the town of
Gerlach. Based upon the terms of the members agreement, the company owns a 60%
interest and GGE owns a 40% interest in Gerlach Geothermal, LLC. The agreement
gives GGE an option to maintain its 40% ownership interest as additional capital
contributions are required. If GGE dilutes to below a 10% interest, their
ownership position in the joint venture would be converted to a 10% net profits
interest. During the quarter end March 31, 2009, the Company contributed
$746,000 in cash and $300,000 for a geothermal lease and mineral rights; and the
GGE contributed $697,000 of geothermal lease, mineral rights and exploration
data.

The consolidated financial statements reflect 100% of the
assets and liabilities of Gerlach, and report the current minority interest of
GGE. The full results of Gerlachs operations will be reflected in the statement
of operations with the elimination of the minoritys interest identified.

NOTE 17  PRO FORMA FINANCIAL INFORMATION

With the acquisition of the assets at San Emidio effective May
1, 2008, we are required to report selected information for our consolidated
statements of operations on a pro forma basis as if the San Emidio acquisition
had been completed at the beginning of the periods being reported on. Selected
line item information is as follows:

|                              |   | For the Three
      Months Ended, |   |   | For the Year
      Ended, |  
|----------------------------- | - | --------------------------------- | - | - | ------------------------- | -
|                              |   | March 31,                         |   |   | March 31,                 |  
|                              |   | 2009                              |   |   | 2008                      |  
|Energy
      Sales            | $ | 425,056                           |   | $ | 380,790                   |  
|Plant Operations              | $ | 679,583                           |   | $ | 581,386                   |  
|Net Loss                      | $ | (244,674                          | ) | $ | (166,117                  | )
|Loss per share                | $ | (0.00                             | ) | $ | (0.00                     | )
|Weighted
      average shares |   | 62,033,884                        |   |   | 53,469,527                |  

-25-

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NOTE 18  SUBSEQUENT EVENTS

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.

-26-

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