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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

Amendment
  No. 1 toFORM 10-K

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934

For the fiscal year ended **March 31, 2007**

Or

[   ]  TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES ACT OF 1934

For the transition period from ______ to ______

Commission File Number **333-117287**

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

|Delaware                                 | 84-1472231         
|---------------------------------------- | -------------------
|(State or Other Jurisdiction of          | (I.R.S. Employer   
|Incorporation or Organization)           | Identification No.)
|                                         |                    
|1509 Tyrell Lane, Suite B                |                    
|Boise, Idaho                             | 83706              
|(Address of Principal Executive Offices) | (Zip Code)         

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

Securities registered under Section 12(b) of the Exchange Act:
  **NONE**

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

Indicate by check mark if the registrant is well-known seasoned
  issuer, as defined in Rule 405 of the Securities Act [   ]Yes 
   [X]  No

Indicate by check mark if the registrant is not required to file
  reports pursuant to Section 13 or Section 15(d) of the Act. [   ]
  Yes [X]  No

Indicate by check mark whether the registrant (1) has filed all
  reports required to be filed by Section 13 or 15(d) of the Securities Exchange
  Act of 1934 during the preceding 12 months (or for such shorter period that
  the registrant was required to file such reports),

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and (2) has been subject to such filing requirements for at least
  the past 90 days. [X]  Yes [   ] No

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

Indicate by check mark whether the registrant is a large accelerated
  filer, or a non-accelerated filer. See definitions of accelerated filer
  and large accelerated filer in Rule 12b-2 of the Exchange Act (Check one)

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

Indicate by check mark whether the registrant is a shell company
  (as defined in Rule 12b-2 of the Act). [   ] Yes [X]  No

The aggregate market value of the voting and non-voting common
  equity held by non-affiliates computed by reference to the price at which the
  common equity was sold, or the average bid and asked price of such common equity,
  as of June 5, 2007: **$109,233,008**

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

|Class of Equity         | Shares Outstanding as of June 5,
      2007
|----------------------- | -------------------------------------------
|Common stock, par value | 53,092,612                                 
|$ 0.001 per share       |                                            

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Explanatory Note: This Amendment No. 1 to the Form 10-K for the period
  ended March 31, 2007 is being filed to amend and restate Part II, Items 6, 7
  and 8. The amendments to the financial statements:

- Increase the cumulative value of stock compensation expense by $150,300
    which results in an increase to the net loss by $150,300 (for an aggregate
    net loss of $1,942,884). This change is a result of a revision to factors
    used in calculating the fair value of stock compensation to “mark to
    market”;
- Reclassify $136,194 from additional paid-in capital to stock compensation
    payable which results in an increase in stock compensation payable of the
    same amount and a decrease in additional paid-in capital of the same amount.
    This change is a result of the FAS 123(R) requirement to classify stock compensation
    grants as liabilities if factors other than time and stock price affected
    the fair value of options granted;
- Segregate geothermal property into additional categories (land, water rights,
    geothermal and mineral rights) in our disclosure in Note 4 - Property, Plant
    and Equipment which results in no aggregate change to total plant, property
    and equipment; and
- Reclassify investing activities on the statement of cash flows which results
    in an increase in reimbursement from partner and a corresponding decrease
    in cash purchases of plant, property and equipment and investment in subsidiary.
    Total cash used by investing activities did not change.

Corresponding amendments have been made to Selected Financial Date and Management’s
  Discussion and Analysis to reflect the amendments to the financial statements.
  Otherwise, this Amendment No. 1 does not modify or update disclosures presented
  in the original Form 10-K.

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**U.S. Geothermal Inc. and Subsidiaries**

Form 10-K

INDEX

For the Year Ended March 31, 2007

|        |                                                                                            
|------- | -------------------------------------------------------------------------------------------
|PART II |                                                                                            
|        |                                                                                            
|Item 6  | Selected Financial Data                                                                    
|Item 7  | Managements Discussion and Analysis
      of Financial Condition and Results of Operations
|Item 8  | Financial Statements and
      Supplementary Data                                          
|        |                                                                                            
|PART IV |                                                                                            
|        |                                                                                            
|Item 15 | Exhibits, Financial Statement Schedules                                                    

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PART II

Item 6. Selected Financial Data

For the Fiscal Year Ended March 31,2007
      2006
      2005
      2004
      2003Operating Revenues
      $                   
        0
      $                   
        0
      $                   
        0
      $                   
        0
      $                   
        0Loss from Continuing Operations
      (1,942,884)
      (1,523,385)
      (1,830,421)
      (676,398)
      (164,905)Loss per share from Continuing Operations
      (0.04)
      (0.09)
      (0.12)
      (0.11)
      (0.03)Cash dividends declared and paid per common share
      0
      0
      0
      0
      0


As of March 31,2007
      2006
      2005
      2004
      2003Total Assets
      $ 22,673,340
      $ 21,895,933
      $ 2,584,970
      $ 1,373,831
      $ 384,664Total Long-term Obligations (1)
      2,533,858
      1,707,548
      0
      0
      0


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

Operating 
        Revenues
      Gross Profit
      Loss from 
        Operations
      Net Loss from 
        Continued 
        OperationsFiscal Year Ended March 31, 20061stQuarter
        (1)
      $                   
        0
      $                   
        0
      $ (370,259)
      $ (254,801)2ndQuarter
        (1)
      0
      0
      (594,601)
      (570,119)3rdQuarter
        (1)
      0
      0
      (502,083)
      (503,917)4thQuarter
      0
      0
      (196,126)
      (194,548)Fiscal Year Ended March 31, 20071stQuarter
      0
      0
      (961,777)
      (372,486)2ndQuarter
      0
      0
      (746,292)
      (680,021)3rdQuarter
      0
      0
      (610,310)
      (338,278)4thQuarter
      0
      0
      (819,790)
      (552,099)


(1) Restated figures. During the fiscal year ended March 31,
  2006, approximately $646,353 in professional fees incurred for plant development
  were expensed prior to the realization that a viable resource was going to result
  from development efforts. After this determination, all direct development costs
  incurred during the fiscal period were capitalized. The effect of this restatement
  increased construction in progress assets and reduced the operating loss for
  the first three quarters of the fiscal year ended March 31, 2006.

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

U.S. Geothermal Inc. is a Delaware corporation. The Companys
  shares of common stock trade on the TSX Venture Exchange under the symbol GTH
  and on the Bulletin Board under the symbol UGTH. On December 19,
  2003, the Company acquired all of the outstanding securities of U.S. Geothermal
  Inc., an Idaho corporation (Geo-Idaho) incorporated in February
  2002, through a transaction merging Geo-Idaho into Evergreen Power Inc., a wholly-owned
  Idaho subsidiary formed for purposes of the merger transaction. Following the
  merger, the Company changed its name from U.S. Cobalt Inc. to U.S. Geothermal
  Inc. Pursuant to the merger, Geo-Idaho became the surviving subsidiary of the
  Company, and Evergreen Power, Inc. ceased to exist. GTH is still a development
  stage company and has produced no revenues to date.

-3-

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During the three months ended March 31, 2007, GTH was focused
  on (1) supporting construction of Phase I of the Raft River, Idaho geothermal
  project (Raft River), (2) the completion of drilling of production
  and injection wells for Phase I, and (3) the evaluation of potential new geothermal
  project acquisitions.

The plants construction is under the direction of Ormat
  Nevada Inc., a subsidiary of Ormat Technologies Inc. Plant construction is proceeding
  on schedule and budget, and the following status is reported:

- Industrial Builders of Ontario, Oregon was awarded the mechanical construction
    contract by Ormat, began fabrication work in February and is assembling the
    plant components,
- The electrical construction contract was awarded to Merit Electric Incorporated
    in May,
- All major equipment has been delivered to the site and has been set on its
    foundations,
- Piping and electrical connections are underway,
- The control room and motor control center building has been erected, and
- The cooling tower is approximately 35% complete.

In addition, Raft River Rural Electric Cooperative has finished
  construction of the 3.2 -mile power transmission line that connects the power
  plant to the Bonneville Power Administration substation at Bridge, Idaho. Equipment
  upgrades to the substation including a breaker, relays, and communications systems
  are underway.

On April 26, 2006, GTH issued a Notice to Proceed to Ormat under
  the Ormat EPC agreement as amended April 25, 2006. An initial payment of $2,020,000
  allows Ormat to proceed with ordering of equipment with significant manufacturing
  lead times. Under the amendment, Ormat commits to a guaranteed final completion
  date of November 25, 2007 on the Phase I facility.

On May 8, 2006, Idaho Power confirmed that GTH would be allowed
  to bid the Raft River Unit 1 project into the recently issued Idaho Power geothermal
  Request for Proposal for Geothermal Power. If Idaho Power selects
  GTH as a successful bidder, the Company expects that under a new PPA with Idaho
  Power which could replace the current PPA, the Unit 1 power plant will be allowed
  to sell its full output capacity of up to 13 megawatt annual average, instead
  of being capped at 10 average megawatt per month as mandated under the current
  PPA. This 30% increase in plant output would be achieved with no additional
  capital investment and is expected to decrease the operating cost per kilowatt-hour.

With carbon regulation widely anticipated to increase the cost
  of power sourced from coal, and limited opportunities to purchase baseload geothermal
  power, the company has found that utilities across the Western United States
  have been eager to discuss power purchases from the Raft River geothermal resource.
  As a result of the increased interest, U.S. Geothermal elected to withdraw its
  Unit 2 and Unit 3 Idaho Power PPAs without submitting them to the IPUC for approval
  in order to pursue larger capacity PPAs with other utilities. With the concurrence
  of Idaho Power, the Unit 2 and Unit 3 10 megawatt contracts have been voided
  without further obligation on either party.

Eugene Water and Electric Board (EWEB), from Eugene,
  Oregon and U.S. Geothermal have signed a letter of intent for EWEB to purchase
  the full 13 megawatt electrical output of Unit 2. The parties have exchanged
  a draft PPA and intend to complete it by October 2007. Upon execution of the
  EWEB PPA, and if Unit 1 is successful in the Idaho Power Request for Proposal,
  then the total output from the Unit 1 and Unit 2 Raft River power plants will
  be 26 megawatts from two plants, instead of the originally planned 30 megawatts
  from three plants, resulting in substantial capital and operating cost savings
  through improved economy of scale.

-4-

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In addition, the strong regional interest in geothermal power
  has resulted in several utilities from California to Washington entering into
  discussions with U.S. Geothermal to purchase the electrical power output of
  Unit 3. Subject to drilling confirmation of sufficient geothermal resource,
  the power plant output from three units at Raft River would be 39 megawatts,
  instead of the maximum 30 megawatts under the previous Idaho Power PPA provisions.

On May 16, 2006, a $225,000 contract was signed with Raft River
  Rural Electrical Co-op to build the production well power distribution lines
  for delivery of electricity from the power plant to the well heads. At fiscal
  year end, the distribution lines were approximately 90% complete.

On May 22, 2006, a $2.6 million contract was signed with Industrial
  Builders of Ontario, Oregon to construct the geothermal pipeline gathering and
  distribution system which will connect the production and injection wells with
  the power plant. At fiscal year end, this component was approximately 90% complete.

On May 24, 2006, GTH signed a geothermal lease agreement with
  JR Land and Livestock Inc. for the lease of approximately 5,409 acres of surface,
  mineral and geothermal rights in Malheur County, Oregon. The lease term is for
  ten years with lease payments of $15,000 at signing, $20,000 in first year,
  $25,000 in second year, and $30,000 for each subsequent year. A geothermal program
  was completed in early 2007, and plans are in progress for a drilling program.

On August 3, 2006, the Company announced the signing of $4.6
  million renewable energy credit (REC) purchase and sale agreement encompassing
  the first 10 years of Phase I of the Raft River project with Holy Cross Energy.

As of July 2006, the Company completed the acquisitions of two
  new properties with ground water rights that will provide cooling water to the
  Phase One and Phase Two power plants and surface access for pipelines and project
  facilities. The two land parcels total 1,083 acres and have irrigation water
  rights for 1,904 acre-feet of water. A third purchase of water rights only was
  also completed for an additional 544 acre-feet of ground water.

On August 10, 2006, the $34 million project finance was announced
  for Phase I of the Raft River development. The project finance structure is
  channeled through a qualified special purpose entity, Raft River Energy I, LLC
  (RREI). Raft River Holdings is an affiliate of The Goldman Sachs Group, and
  is the Companys investment partner in RREI. The Company has made a $5
  million dollar cash contribution and is transferring to RREI the existing seven
  production and injection wells, and certain geothermal rights and leases covering
  the 1,800 acres from the 5,238 total acres of geothermal rights currently held.
  Raft River Holdings will make capital contributions totaling $34 million in
  accordance with the construction payments schedule. The partnership does not
  restrict further development of the Companys geothermal rights and allows
  for the development of the planned Phase Two power plants.

Announced on September 5, 2006, property for a second geothermal
  project at Neal Hot Springs in eastern Oregon near the Idaho Border was acquired
  by the Company. The new property consists of 8.5 square miles of geothermal
  energy and surface rights and was leased from a

-5-

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private, third party. The property has an identified geothermal
  resource and was recently made part of U.S. Geothermals submittal to Idaho
  Power Companys Request For Proposals for electricity produced from geothermal
  sources.

On February 6, 2007, a lease was entered into with Cyprus Gold
  Exploration Corporation (Cyprus), a subsidiary of Phelps Dodge Corporation
  (NYSE: PD), for and undivided interest in geothermal rights associated with
  4,760 acres (7.4 square miles) at Neal Hot Springs. This lease adds 758 acres
  (1.2 square miles) of new area to the lease announced on September 5, 2006,
  and overlaps both surface and undivided geothermal rights that were previously
  acquired at the site.

With the Cyprus lease, U.S. Geothermal has increased its total
  Neal Hot Springs project holdings to 6,167 acres (9.6 square miles) and increased
  ownership of the overlapping area to a majority of the geothermal rights in
  that area. The Cyprus lease has a primary term of 10 years that extends thereafter
  for as long as commercial production is maintained and includes annual rental
  and production royalty payment provisions. U.S. Geothermal has ongoing negotiations
  with additional geothermal rights holders in the area.

U.S. Geothermal has awarded a $1.3 million dollar contract to
  ITT Industries/Goulds Pumps to provide line-shaft geothermal production pumps
  for the project. The first production pump has been delivered.

The well improvement drill program, which began in August 2006,
  has been completed. Four existing wells were enhanced either by deepening or
  adding directional legs to improve their production or injection characteristics.
  Two new wells were drilled to expand the geothermal resource for the planned
  second 13 megawatt net output power plant at Raft River. Resource utilization
  studies have determined that production well RRG-3 will be converted to an injection
  well and that injection well RRG-7 will be converted to a production well.

On December 28, 2006, the Company entered into an agreement with
  Disco Associates, Inc. for well-head construction for the initial base amount
  of $478,475. At fiscal year end, this project was approximately 13% complete.

On March 21, 2007, the Company was named successful bidder in
  Idaho Power Companys request for geothermal electricity. Negotiations
  began on the terms of a purchase power agreement for an annual average of 45.5
  megawatts from the Raft River and Neal Hot Springs projects.

The Company entered into an agreement with a syndicate of Canadian
  investment dealers to underwrite a private placement of 6,818,182 shares of
  common shares at a cost of $2.20 CDN per share to raise gross proceeds of approximately
  $15 million in Canadian dollars ($13.5 million US Dollars). The Underwriters
  had the option to purchase up to an additional 2,272,727 common shares at the
  issue price under the offering that could gross up to approximately $20 million
  in Canadian dollars ($18.0 million US Dollars). The proceeds will be used to
  fund current and future plant development. The offering closed June 5, 2007
  and is subject to certain conditions including, but not limited to, the approval
  of the TSX Venture Exchange.

-6-

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Liquidity and Capital Resources

We believe our cash and liquid investments at March 31, 2007,
  added to our recent private placement completed June 5, 2007, is adequate to
  fund our general operating and development activities through March 31, 2009.
  The Company obtained project capital to construct Raft River power plant through
  a partnership arrangement. Through the arrangement, equity funds of approximately
  $34 million were made available for the construction of the project. Total capital
  expenditures for the phase one project are currently estimated to be between
  $39 and $41 million. The majority of the funds needed for the project will be
  provided by existing funds and through the partnership arrangement. If additional
  funds are needed, we anticipate that the equity may be raised through the issuance
  of shares, exercise of existing outstanding warrants, and/or through the sale
  of ownership interest in tax credits and benefits

Potential Acquisitions

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

Critical Accounting Policies

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

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

The Company does not consider such items to be cash equivalents
  if there is a significant restriction placed upon the use of those assets. At
  fiscal year end, the Company held deposits

-7-

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that were restricted according to a contractual arrangement with
  a major vendor. Accordingly, these deposits were classified as restricted cash,
  rather than cash equivalents.

Going Concern 
  Based on our projected spending over the next 12 months, our current operating
  funds and approximately $18 million that was raised from the private placement
  completed June 5, 2007, our auditors have determined that the going concern
  qualification from our financial statements is not needed. Management believes
  that sufficient funding will be available to meet our business objectives, including
  anticipated cash needs for working capital, and financing for construction of
  the Phase 1 power plant. As shown in the accompanying consolidated financial
  statements, we have incurred an accumulated deficit of $7,142,623 for the period
  from February 26, 2002 (inception) to March 31, 2007, and have no revenue from
  operations. In the ordinary course of constructing a power plant facility of
  this size and complexity, cost overruns and contract delays can significantly
  affect the economics of the project. Failure to achieve commercial operations
  of the power plant prior to December 31, 2007 would jeopardize the production
  tax credit, and could materially affect the ability of U.S. Geothermal to operate
  as a going concern.

Property, Plant and Equipment 
  During the development stage of operations, the Company has purchased and otherwise
  acquired geothermal properties for the production of power. The geothermal properties
  include: drilled wells, power plant components, power plant support components,
  land, land rights, surface water rights, and mineral rights. Since the costs
  of land and the rights surrounding the access geothermal and surface water reservoirs
  are relatively small, these items have been included, but have not been reported
  separately in our financial statements. The Companys first power plant
  is scheduled to be operational in October 2007; however, it was still under
  construction at fiscal year end. The costs of this power plant are being accumulated
  in construction in process accounts until the plant becomes operational. Once
  the plant is operational, these costs will be charged to operations in a systematic
  manner based upon the total estimated gallons of water the plant is expected
  to produce over its useful life. The factors and assumptions that comprise this
  allocation process will be based upon the best information available to us,
  and will be evaluated, at least, annually for viability. If it is determined
  that our cost allocations have produced results that vary significantly from
  the conditions surrounding the value of the Companys geothermal properties,
  a gain or loss adjustment will be made in the period in which this determination
  is made. The cost allocation or amortization process is not intended to present
  the fair market value of our geothermal properties; rather to allocate the actual
  historical costs of those properties over their service lives.

The costs of machinery, vehicles and other equipment, currently
  in operation, are being depreciated in a systematic manner. For these assets,
  depreciation is calculated based upon the straight-line method at a rate of
  30%, which allocates the costs evenly over the assets estimated service
  life. Depreciation costs calculated for assets that are not directly involved
  in the production of geothermal properties are charged to operations.

Income Taxes 
  According to generally accepted accounting practices, entities must recognize
  assets and/or liabilities that originate with the differences in revenues and
  expenses presented for financial

-8-

---

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

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

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

-9-

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Operating Results

March 31, 2007 compared to March 31, 2006

For the year ended March 31, 2007, we incurred a loss of $1,943,000
  or $0.04 per share. This compares to a loss for the year ended March 31, 2006
  of $1,491,000 or $0.09 per share.

The main reason for this increased loss is that non-cash stock-based
  compensation granted to directors, officers and employees increased by $948,000
  from $181,000 for the year ended March 31, 2006 to $1,129,000 for the year ended
  March 31, 2007. Stock options granted during the year were 2,168,000 options
  in 2007 as compared to 50,000 options in 2006. The stock options are a part
  of our annual executive compensation plan, and are issued to obtain, retain
  and motivate our directors, executives and employees. During 2007, the Company
  attained several significant milestones (EPC Agreement with Ormat, Transmission
  Agreement with Bonneville Power Administration, REC Sales Agreement with Holy
  Cross Energy, initiation of Unit 1 construction, etc.) which necessitated recognition
  of the significant work effort of our directors, executives and employees for
  current and prior years.

In addition, professional fees totaled $663,000 in 2007 as compared
  to $386,000 in 2006. Legal and accounting fees increased $277,000 in 2007 due
  to legal fees associated with due diligence costs for a private placement ($111,500),
  an SB-2 registration statement ($18,667) and the negotiation of the Raft River
  Energy operating agreement ($78,265), and an increase in accounting fees associated
  with amendments to prior year federal tax returns ($29,800). Losses incurred
  at Raft River Energy of $102,000 were recorded in 2007.

Increases in interest income of $670,000 from $23,000 in fiscal
  2006 to $694,000 in fiscal 2007 and increases in foreign currency gain of $262,000
  from $149,000 in fiscal 2006 to $411,000 in fiscal 2007 helped to offset partially
  the increased costs. The interest income resulted from money market fund interest
  on the balance of our company’s cash balances. The foreign currency gain
  resulted from timing on transferring funds from the April 2006 private placement
  from our Canadian accounts into the United States.

March 31, 2006 compared to March 31, 2005

For the year ended March 31, 2006, we incurred a loss of $1,491,000
  or $0.09 per share. The compares to a loss for the year ended March 31, 2005
  of $1,830,000 or $0.12 per share. The main reason for this decreased loss is
  that exploration expenditures decreased by $439,000 in a year to year comparison.
  U.S. Geothermal development costs were capitalized in 2006 as a geothermal reservoir
  had been identified, and determined to be economic.

In addition, consulting fees decreased by $461,000 in 2006, which
  was offset partially by an increase in salaries and wages of $355,000. Individuals
  previously paid as consultants were hired as employees effective April 1, 2006.

Travel and promotion expenses increased $ 271,000 as the Company
  increased marketing and promotional efforts to attract and retain investors.
  Foreign currency gain increased by $245,000 as funds were transferred from our
  Canadian accounts into the U.S.

Contractual Obligations

The following table denotes contractual obligation by payments
  due for each period.

Total
      < 1 year
      1-3 years
      3-5 years
      > 5 yearsStock Compensation Payable
      $2,533,858
      $ 0
      $1,465,201
      $ 1,068,657
      $ 0RRE Construction obligations (1)
      $7,521,200
      $7,521,200
      $ 0
      $ 0
      $ 0


(1) Raft River Energy I LLC is the joint venture partnership
  constructing the power plant at Raft River, Idaho. This subsidiary is not consolidated
  into the financial statements. However, the obligations of Raft River Energy
  are reflected in this table in order to provide greater information on the Raft
  River Project.

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

-10-

---

Off Balance Sheet Arrangements

As of March 31, 2007, the Company does not have any off balance
  sheet arrangements.

Item 8. Financial Statements and Supplementary Data

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

-11-

---

U.S. GEOTHERMAL INC.(A Development Stage Company)

Consolidated Financial StatementsMarch 31, 2007

(As amended September 26, 2007- see Note 11)

---

Board of Directors
  U.S. Geothermal Inc.
  Boise, Idaho

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have audited the accompanying consolidated balance sheet of
  U.S. Geothermal Inc. (a development stage company) as of March 31, 2007, and
  the related consolidated statements of operations, stockholders equity
  and cash flows for the year then ended and for the period from February 26,
  2002 (inception) through March 31, 2007. These consolidated financial statements
  are the responsibility of the Companys management. Our responsibility
  is to express an opinion on these consolidated financial statements based on
  our audit. The financial statements of U.S. Geothermal Inc. as of March 31,
  2005 were audited by other auditors whose report dated June 16, 2005 expressed
  an unqualified opinion on those financial statements.

We conducted our audit in accordance with the standards of the
  Public Company Accounting Oversight Board (United States). Those standards require
  that we plan and perform the audit to obtain reasonable assurance about whether
  the financial statements are free of material misstatement. An audit includes
  examining, on a test basis, evidence supporting the amounts and disclosures
  in the financial statements. An audit also includes assessing the accounting
  principles used and significant estimates made by management, as well as evaluating
  the overall financial statement presentation. We believe that our audit provides
  a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred
  to above present fairly, in all material respects, the financial position of
  U.S. Geothermal Inc. as of March 31, 2007 and the results of its operations,
  stockholders equity, and cash flows for the year then ended and for the
  period from February 26, 2002 (inception) through March 31, 2007 in conformity
  with accounting principles generally accepted in the United States of America.

As more fully described in Note 11, errors resulting in the understatement
  of the previously reported net loss at March 31, 2007 were discovered by management
  subsequent to the issuance of the Companys March 31, 2007 financial statements.
  These errors were due to the Company originally reflecting the issuance of stock
  options related to employee compensation at fair market value on the date of
  issuance rather than fair market value as of the date of the balance sheet.
  Accordingly, an adjustment has been made to the accompanying financial statements
  as of March 31, 2007 to correct these errors.

Williams & Webster, P.S.
  Certified Public Accountants
  Spokane, Washington
  June 25, 2007 except for Note 11, which is dated September 24, 2007

-13-

---



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
  FIRM

To the Stockholders of
  U.S. Geothermal Inc.
  (A development stage company)

We have audited the accompanying consolidated statements of operations
  and comprehensive loss, cash flows, and stockholders equity of U.S. Geothermal
  Inc. (a development stage company) and its subsidiaries for the year then ended
  March 31, 2005 and for the cumulative period from February 26, 2002 (date of
  inception) to March 31, 2005. These financial statements are the responsibility
  of the Company's management. Our responsibility is to express an opinion on
  these financial statements based on our audit.

We conducted our audits in accordance with the standards of the
  Public Company Accounting Oversight Board (United States). Those standards require
  that we plan and perform an audit to obtain reasonable assurance whether the
  financial statements are free of material misstatement. An audit includes examining,
  on a test basis, evidence supporting the amounts and disclosures in the financial
  statements. An audit also includes assessing the accounting principles used
  and significant estimates made by management, as well as evaluating the overall
  financial statement presentation. We believe that our audits provide a reasonable
  basis for our opinion.

In our opinion, the financial statements referred to above present
  fairly, in all material respects, the consolidated results of its operations
  and its cash flows for the periods indicated in conformity with accounting principles
  generally accepted in the United States.

The Company is not required to have, nor were we engaged to perform,
  an audit of its internal control over financial reporting. Our audits included
  consideration of internal control over financial reporting as a basis for designing
  audit procedures that are appropriate in the circumstances, but not for the
  purpose of expressing an opinion on the effectives of the Companys internal
  control over financial reporting. Accordingly, we express no such opinion.

The accompanying financial statements have been prepared assuming
  the Company will continue as a going concern. As discussed in Note 1 to the
  financial statements, the Company has suffered losses since inception, has not
  attained profitable operations and is dependent upon obtaining adequate financing
  to fulfil its development activities. These factors raise substantial doubt
  that the Company will be able to continue as a going concern. Managements
  plans in regard to these matters are also discussed in Note 1. The financial
  statements do not include any adjustments that might result from the outcome
  of this uncertainty.

|Vancouver, Canada | Morgan & Company   
|----------------- | ---------------------
|June 16, 2005     | Chartered Accountants

-14-

---

U.S. GEOTHERMAL INC.(A Development Stage Company)CONSOLIDATED BALANCE SHEETS(Stated in U.S. Dollars)

|                                                        |   | March
      31, |   |   | March 31,  |  
|------------------------------------------------------- | - | --------------- | - | - | ---------- | -
|                                                        |   | 2007            |   |   | 2006       |  
|                                                        |   |                 |   |   |            |  
|ASSETS                                                  |   |                 |   |   |            |  
|                                                        |   |                 |   |   |            |  
|Current                                                 |   |                 |   |   |            |  
|Cash and
      cash equivalents                         | $ | 6,759,161       |   | $ | 196,499    |  
|Restricted cash                                         |   | 5,363,400       |   |   | -          |  
|Private placement
      proceeds receivable             |   | -               |   |   | 19,961,890 |  
|Accounts receivable from
      subsidiary               |   | 154,277         |   |   | -          |  
|Other current
      assets                              |   | 27,706          |   |   | 11,429     |  
|Total current assets                                    |   | 12,304,544      |   |   | 20,169,818 |  
|                                                        |   |                 |   |   |            |  
|Investment in subsidiary (note 2)                       |   | 6,230,410       |   |   | -          |  
|Property, plant and equipment                           |   | 4,138,386       |   |   | 1,726,115  |  
|Total assets                                            | $ | 22,673,340      |   | $ | 21,895,933 |  
|                                                        |   |                 |   |   |            |  
|                                                        |   |                 |   |   |            |  
|LIABILITIES                                             |   |                 |   |   |            |  
|                                                        |   |                 |   |   |            |  
|Current:                                                |   |                 |   |   |            |  
|Accounts payable and accrued
      liabilities          | $ | 1,446,952       |   | $ | 270,831    |  
|Related party
      accounts payable                    |   | 9,510           |   |   | 10,083     |  
|Total current liabilities                               |   | 1,456,462       |   |   | 280,914    |  
|Long-term:                                              |   |                 |   |   |            |  
|Stock compensation payable
      (note 2 and 6)         |   | 2,533,858       |   |   | 1,707,548  |  
|Total liabilities                                       |   | 3,990,320       |   |   | 1,988,462  |  
|                                                        |   |                 |   |   |            |  
|STOCKHOLDERS EQUITY                                    |   |                 |   |   |            |  
|                                                        |   |                 |   |   |            |  
|Capital stock                                           |   |                 |   |   |            |  
|Authorized:                                             |   |                 |   |   |            |  
|100,000,000
      common shares with a $0.001 par value |   |                 |   |   |            |  
|Issued and outstanding:                                 |   |                 |   |   |            |  
|43,810,512 shares at March 31, 2007 and                 |   |                 |   |   |            |  
|18,263,844
      shares at March 31, 2006               |   | 43,811          |   |   | 18,264     |  
|Capital stock issuable                                  |   | -               |   |   | 20,134,260 |  
|Additional paid-in capital                              |   | 25,781,832      |   |   | 4,954,690  |  
|Accumulated deficit before development stage            |   | (1,004,630      | ) |   | (1,004,630 | )
|Accumulated deficit during development stage (note 11)  |   | (6,137,993      | ) |   | (4,195,113 | )
|Total stockholders
      equity                        |   | 18,683,020      |   |   | 19,907,471 |  
|                                                        |   |                 |   |   |            |  
|Total liabilities and stockholders equity              | $ | 22,673,340      |   | $ | 21,895,933 |  

-15-

---

U.S. GEOTHERMAL INC.(A Development Stage Company)CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS(Stated in U.S. Dollars)

|                                           |   |                      |   |   |                   |   |   |            |   |   | Cumulative Period   |  
|------------------------------------------ | - | -------------------- | - | - | ----------------- | - | - | ---------- | - | - | ------------------- | -
|                                           |   | Year Ended March 31, |   |   | From February 26, |  
|                                           |   |                      |   |   |                   |   |   |            |   |   | 2002 (Inception) to |  
|                                           |   | 2007                 |   |   | 2006              |   |   | 2005       |   |   | March 31, 2007      |  
|                                           |   |                      |   |   |                   |   |   |            |   |   |                     |  
|Revenue                                    | $ | -                    |   | $ |                   |   | $ | -          |   | $ | -                   |  
|                                           |   |                      |   |   |                   |   |   |            |   |   |                     |  
|Operating Expenses                         |   |                      |   |   |                   |   |   |            |   |   |                     |  
|Loss from investment in subsidiary         |   | 102,336              |   |   | -                 |   |   | -          |   |   | 102,336             |  
|Consulting fees                            |   | 67,913               |   |   | 29,005            |   |   | 489,747    |   |   | 463,804             |  
|Corporate admin and development            |   | 215,914              |   |   | 185,186           |   |   | 118,098    |   |   | 549,481             |  
|Exploration expenditures                   |   | -                    |   |   | -                 |   |   | 438,885    |   |   | 440,611             |  
|Professional fees                          |   | 663,009              |   |   | 386,275           |   |   | 104,081    |   |   | 1,627,001           |  
|Management fees                            |   | 45,515               |   |   | 36,415            |   |   | 86,463     |   |   | 326,748             |  
|Salaries and wages                         |   | 506,354              |   |   | 484,656           |   |   | 129,219    |   |   | 1,094,223           |  
|Stock based compensation (note 11)         |   | 1,129,072            |   |   | 180,779           |   |   | 295,540    |   |   | 1,901,463           |  
|Travel and promotion                       |   | 408,056              |   |   | 360,753           |   |   | 89,497     |   |   | 882,574             |  
|Loss from Operations                       |   | (3,138,169           | ) |   | (1,663,069        | ) |   | (1,751,530 | ) |   | (7,388,241          | )
|                                           |   |                      |   |   |                   |   |   |            |   |   |                     |  
|Other Income                               |   |                      |   |   |                   |   |   |            |   |   |                     |  
|Foreign exchange gain                      |   | 411,341              |   |   | 149,200           |   |   | (95,885    | ) |   | 422,611             |  
|Other income                               |   | 90,206               |   |   | -                 |   |   | -          |   |   | 90,206              |  
|Interest income                            |   | 693,738              |   |   | 23,276            |   |   | 16,994     |   |   | 737,431             |  
|                                           |   |                      |   |   |                   |   |   |            |   |   |                     |  
|Net Loss                                   | $ | (1,942,884           | ) | $ | (1,490,593        | ) | $ | (1,830,421 | ) | $ | (6,137,993          | )
|                                           |   |                      |   |   |                   |   |   |            |   |   |                     |  
|                                           |   |                      |   |   |                   |   |   |            |   |   |                     |  
|Basic And Diluted
      Net Loss Per Share | $ | (0.04                | ) | $ | (0.09             | ) | $ | (0.12      | ) |   |                     |  
|                                           |   |                      |   |   |                   |   |   |            |   |   |                     |  
|                                           |   |                      |   |   |                   |   |   |            |   |   |                     |  
|Weighted Average Number Of Shares          |   |                      |   |   |                   |   |   |            |   |   |                     |  
|Outstanding for Basic and Diluted          |   | 43,640,303           |   |   | 17,797,637        |   |   | 15,209,468 |   |   |                     |  
|Calculations                               |   |                      |   |   |                   |   |   |            |   |   |                     |  
|                                           |   |                      |   |   |                   |   |   |            |   |   |                     |  
|                                           |   |                      |   |   |                   |   |   |            |   |   |                     |  
|Other Comprehensive Income (Loss)          |   |                      |   |   |                   |   |   |            |   |   |                     |  
|Net loss
      for the period              | $ | (1,942,884           | ) | $ | (1,490,593        | ) | $ | (1,830,421 | ) | $ | (6,137,993          | )
|Foreign currency translation               |   |                      |   |   |                   |   |   |            |   |   |                     |  
|adjustment                                 |   | -                    |   |   | (165,262          | ) |   | 165,262    |   |   | -                   |  
|                                           |   |                      |   |   |                   |   |   |            |   |   |                     |  
|Total Comprehensive Loss                   | $ | (1,942,884           | ) | $ | (1,655,855        | ) | $ | (1,665,159 | ) | $ | (6,137,993          | )

-16-

---

U.S. GEOTHERMAL INC.(A Development Stage Company)CONSOLIDATED STATEMENTS OF CASH FLOWS(Stated in U.S. Dollars)

|                                              |   |                      |   |   |                |   |   |            |   |   | From February  |  
|--------------------------------------------- | - | -------------------- | - | - | -------------- | - | - | ---------- | - | - | -------------- | -
|                                              |   |                      |   |   |                |   |   |            |   |   | 26, 2002       |  
|                                              |   | Year Ended March 31, |   |   | (Inception) to |  
|                                              |   | 2007                 |   |   | 2006           |   |   | 2005       |   |   | March 31, 2007 |  
|                                              |   |                      |   |   |                |   |   |            |   |   |                |  
|Operating Activities:                         |   |                      |   |   |                |   |   |            |   |   |                |  
|Net loss                                      | $ | (1,942,884           | ) | $ | (1,490,593     | ) | $ | (1,830,421 | ) | $ | (6,137,993     | )
|Add non-cash items:                           |   |                      |   |   |                |   |   |            |   |   |                |  
|Depreciation                                  |   | 16,511               |   |   | 1,350          |   |   | 1,399      |   |   | 19,836         |  
|Loss of operations of subsidiary              |   | 133,304              |   |   | -              |   |   | -          |   |   | 133,304        |  
|Shares issued for other
      than cash       |   | 65,384               |   |   | 84,000         |   |   | -          |   |   | 198,984        |  
|Stock based compensation                      |   | 1,129,072            |   |   | 180,779        |   |   | 295,540    |   |   | 1,901,463      |  
|Change in non-cash working capital items:     |   |                      |   |   |                |   |   |            |   |   |                |  
|Accounts receivable, subsidiary               |   | (154,277             | ) |   | -              |   |   |            |   |   | (154,277       | )
|Accounts payable
      and accrued            |   |                      |   |   |                |   |   |            |   |   |                |  
|liabilities                                   |   | (160,166             | ) |   | 115,812        |   |   | (20,363    | ) |   | 120,748        |  
|Prepaid expenses
      & other                |   | (16,277              | ) |   | (1,608         | ) |   | (24,294    | ) |   | (27,706        | )
|Total cash used by operating activities       |   | (929,333             | ) |   | (1,110,260     | ) |   | (1,578,139 | ) |   | (3,945,641     | )
|                                              |   |                      |   |   |                |   |   |            |   |   |                |  
|Investing Activities:                         |   |                      |   |   |                |   |   |            |   |   |                |  
|Purchases of property, plant and equipment    |   | (2,456,782           | ) |   | (1,131,764     | ) |   | (41,331    | ) |   | (4,153,431     | )
|Cash acquired in business combination         |   | -                    |   |   | -              |   |   | -          |   |   | 5,798          |  
|Cash restricted under contract                |   | (5,363,400           | ) |   | -              |   |   | -          |   |   | (5,363,400     | )
|Investment in subsidiary                      |   | (9,917,100           | ) |   |                |   |   |            |   |   | (9,917,100     | )
|Reimbursement from partner                    |   | 4,917,100            |   |   | -              |   |   | -          |   |   | 4,917,100      |  
|Total cash used by investing activities       |   | (12,820,182          | ) |   | (1,131,764     | ) |   | (41,331    | ) |   | (14,511,033    | )
|                                              |   |                      |   |   |                |   |   |            |   |   |                |  
|Financing Activities:                         |   |                      |   |   |                |   |   |            |   |   |                |  
|Issuance of share capital, net of share issue |   |                      |   |   |                |   |   |            |   |   |                |  
|cost                                          |   | 20,312,177           |   |   | 646,710        |   |   | 2,576,562  |   |   | 25,215,835     |  
|Total cash provided by
      financing        |   |                      |   |   |                |   |   |            |   |   |                |  
|activities                                    |   | 20,312,177           |   |   | 646,710        |   |   | 2,576,562  |   |   | 25,215,835     |  
|                                              |   |                      |   |   |                |   |   |            |   |   |                |  
|Foreign Exchange Effect On Cash And           |   |                      |   |   |                |   |   |            |   |   |                |  
|Cash Equivalents                              |   | -                    |   |   | (165,262       | ) |   | 129,470    |   |   | -              |  
|                                              |   |                      |   |   |                |   |   |            |   |   |                |  
|Increase (Decrease) In Cash And Cash          |   |                      |   |   |                |   |   |            |   |   |                |  
|Equivalents                                   |   | 6,562,662            |   |   | (1,760,576     | ) |   | 1,086,562  |   |   | 6,759,161      |  
|                                              |   |                      |   |   |                |   |   |            |   |   |                |  
|Cash And Cash Equivalents, Beginning          |   |                      |   |   |                |   |   |            |   |   |                |  
|Of Period                                     |   | 196,499              |   |   | 1,957,075      |   |   | 870,513    |   |   | -              |  
|                                              |   |                      |   |   |                |   |   |            |   |   |                |  
|Cash And Cash Equivalents, End Of             |   |                      |   |   |                |   |   |            |   |   |                |  
|Period                                        | $ | 6,759,161            |   | $ | 196,499        |   | $ | 1,957,075  |   | $ | 6,759,161      |  

-17-

---

U.S. GEOTHERMAL INC.(A Development Stage Company)CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)(Stated in U.S. Dollars)

|                                                       |   |            |   |   | Year Ended |  |   |        |  |  | From February
      26, 2002 |  
|------------------------------------------------------ | - | ---------- | - | - | ---------- |  | - | ------ |  |  | ---------------------------- | -
|                                                       |   |            |   |   | March 31,  |  |   |        |  |  | (Inception) to               |  
|                                                       |   | 2007       |   |   | 2006       |  |   | 2005   |  |  | March 31, 2007               |  
|                                                       |   |            |   |   |            |  |   |        |  |  |                              |  
|Supplemental Disclosure:                               |   |            |   |   |            |  |   |        |  |  |                              |  
|Non-cash investing and financing activities            |   |            |   |   |            |  |   |        |  |  |                              |  
|Transfer
      of property and equipment to subsidiary | $ | 1,363,714  |   |   |            |  | $ |        |  |  | 1,363,714                    |  
|Shares issued for settlement
      of debt             |   |            |   |   |            |  |   |        |  |  | 173,639                      |  
|Shares issued
      with employment agreements         |   | 65,384     |   | $ | 84,000     |  |   |        |  |  | 198,984                      |  
|Shares issued for geothermal
      property            |   |            |   |   |            |  | $ | 60,350 |  |  | 77,350                       |  
|Purchase
      of property and equipment on account    |   | (1,335,714 | ) |   |            |  |   |        |  |  | (1,335,714                   | )
|Warrants issued for share
      issue cost             |   |            |   |   |            |  |   |        |  |  | 158,778                      |  

-18-

---

U.S. GEOTHERMAL INC.(A Development Stage Company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (Continued)

FROM INCEPTION, FEBRUARY 26, 2002 TO MARCH 31, 2007(Stated in U.S. Dollars)

|                                                                |  |           |  |   |        |  |   |            |  |   |          |  |   |          |  |   | ACCUM. |  |   |          |   |   |          |  
|--------------------------------------------------------------- |  | --------- |  | - | ------ |  | - | ---------- |  | - | -------- |  | - | -------- |  | - | ------ |  | - | -------- | - | - | -------- | -
|                                                                |  | NUMBER    |  |   |        |  |   | ADDITIONAL |  |   | CAPITAL  |  |   | STOCK    |  |   | OTHER  |  |   |          |   |   |          |  
|                                                                |  | OF        |  |   |        |  |   | PAID-IN    |  |   | STOCK    |  |   | PURCHASE |  |   | COMP.  |  |   | ACCUM.   |   |   |          |  
|                                                                |  | SHARES    |  |   | AMOUNT |  |   | CAPITAL    |  |   | ISSUABLE |  |   | WARRANTS |  |   | INCOME |  |   | DEFICIT  |   |   | TOTAL    |  
|                                                                |  |           |  |   |        |  |   |            |  |   |          |  |   |          |  |   |        |  |   |          |   |   |          |  
|Shares issued for cash at $0.015 per share  February
      26, |  |           |  |   |        |  |   |            |  |   |          |  |   |          |  |   |        |  |   |          |   |   |          |  
|2002                                                            |  | 2,600,000 |  | $ | 2,600  |  | $ | 37,400     |  | $ | -        |  | $ | -        |  | $ | -      |  | $ | -        |   | $ | 40,000   |  
|Shares and warrants issued for Geothermal property at           |  |           |  |   |        |  |   |            |  |   |          |  |   |          |  |   |        |  |   |          |   |   |          |  
|$0.009  March 5, 2002                                          |  | 1,895,000 |  |   | 1,895  |  |   | 15,105     |  |   |          |  |   |          |  |   |        |  |   |          |   |   | 17,000   |  
|                                                                |  |           |  |   |        |  |   |            |  |   |          |  |   |          |  |   |        |  |   |          |   |   |          |  
|                                                                |  |           |  |   |        |  |   |            |  |   |          |  |   |          |  |   |        |  |   |          |   |   |          |  
|Balance, March 31, 2002  U.S. Geothermal Inc. 
      Idaho    |  | 4,495,000 |  |   | 4,495  |  |   | 52,505     |  |   | -        |  |   | -        |  |   | -      |  |   | -        |   |   | 57,000   |  
|                                                                |  |           |  |   |        |  |   |            |  |   |          |  |   |          |  |   |        |  |   |          |   |   |          |  
|                                                                |  |           |  |   |        |  |   |            |  |   |          |  |   |          |  |   |        |  |   |          |   |   |          |  
|Shares issued for cash at $0.25 per share 
      May 28, 2002  |  | 395,000   |  |   | 395    |  |   | 98,355     |  |   |          |  |   |          |  |   |        |  |   |          |   |   | 98,750   |  
|Shares issued for services at $0.25 per share  May 28,         |  |           |  |   |        |  |   |            |  |   |          |  |   |          |  |   |        |  |   |          |   |   |          |  
|2002                                                            |  | 5,000     |  |   | 5      |  |   | 1,245      |  |   |          |  |   |          |  |   |        |  |   |          |   |   | 1,250    |  
|Shares issued for cash at $0.30 per share  November 1,         |  |           |  |   |        |  |   |            |  |   |          |  |   |          |  |   |        |  |   |          |   |   |          |  
|2002                                                            |  | 1,023,667 |  |   | 1,024  |  |   | 306,076    |  |   |          |  |   |          |  |   |        |  |   |          |   |   | 307,100  |  
|Shares issued for services at $0.30 per share  November        |  |           |  |   |        |  |   |            |  |   |          |  |   |          |  |   |        |  |   |          |   |   |          |  
|1, 2002                                                         |  | 10,000    |  |   | 10     |  |   | 2,990      |  |   |          |  |   |          |  |   |        |  |   |          |   |   | 3,000    |  
|Shares issued for services at $0.30 per share  February        |  |           |  |   |        |  |   |            |  |   |          |  |   |          |  |   |        |  |   |          |   |   |          |  
|14, 2003                                                        |  | 151,170   |  |   | 151    |  |   | 45,199     |  |   |          |  |   |          |  |   |        |  |   |          |   |   | 45,350   |  
|                                                                |  |           |  |   |        |  |   |            |  |   |          |  |   |          |  |   |        |  |   |          |   |   |          |  
|Net loss for the period                                         |  |           |  |   |        |  |   |            |  |   |          |  |   |          |  |   |        |  |   | (164,909 | ) |   | (164,909 | )
|                                                                |  |           |  |   |        |  |   |            |  |   |          |  |   |          |  |   |        |  |   |          |   |   |          |  
|Balance carried forward, March 31, 2003 
      U.S.            |  |           |  |   |        |  |   |            |  |   |          |  |   |          |  |   |        |  |   |          |   |   |          |  
|Geothermal Inc.  Idaho                                         |  | 6,079,837 |  | $ | 6,080  |  | $ | 506,370    |  | $ | -        |  | $ | -        |  | $ | -      |  | $ | (164,909 | ) | $ | 347,541  |  

-19-

---

U.S. GEOTHERMAL INC.(A Development Stage Company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (Continued)

FROM INCEPTION, FEBRUARY 26, 2002, TO MARCH 31, 2007(Stated in U.S. Dollars)

|                                                                  |  |            |   |   |        |   |   |            |   |   |          |  |   |           |  |   | ACCUM. |  |   |            |   |   |           |  
|----------------------------------------------------------------- |  | ---------- | - | - | ------ | - | - | ---------- | - | - | -------- |  | - | --------- |  | - | ------ |  | - | ---------- | - | - | --------- | -
|                                                                  |  | NUMBER     |   |   |        |   |   | ADDITIONAL |   |   | CAPITAL  |  |   | STOCK     |  |   | OTHER  |  |   |            |   |   |           |  
|                                                                  |  | OF         |   |   |        |   |   | PAID-IN    |   |   | STOCK    |  |   | PURCHASE  |  |   | COMP.  |  |   | ACCUM.     |   |   |           |  
|                                                                  |  | SHARES     |   |   | AMOUNT |   |   | CAPITAL    |   |   | ISSUABLE |  |   | WARRANTS  |  |   | INCOME |  |   | DEFICIT    |   |   | TOTAL     |  
|                                                                  |  |            |   |   |        |   |   |            |   |   |          |  |   |           |  |   |        |  |   |            |   |   |           |  
|Balance carried forward, March 31, 2003  U.S.                    |  |            |   |   |        |   |   |            |   |   |          |  |   |           |  |   |        |  |   |            |   |   |           |  
|Geothermal Inc.  Idaho                                           |  | 6,079,837  |   | $ | 6,080  |   | $ | 506,370    |   | $ | -        |  | $ | -         |  | $ | -      |  | $ | (164,909   | ) | $ | 347,541   |  
|                                                                  |  |            |   |   |        |   |   |            |   |   |          |  |   |           |  |   |        |  |   |            |   |   |           |  
|Consolidation adjustment to the number of shares
      issued     |  |            |   |   |        |   |   |            |   |   |          |  |   |           |  |   |        |  |   |            |   |   |           |  
|and outstanding as a result of the reverse take-over              |  |            |   |   |        |   |   |            |   |   |          |  |   |           |  |   |        |  |   |            |   |   |           |  
|transaction- U.S. Geothermal Inc.-
      Idaho; December          |  |            |   |   |        |   |   |            |   |   |          |  |   |           |  |   |        |  |   |            |   |   |           |  
|19, 2003                                                          |  | (6,079,837 | ) |   | (6,080 | ) |   | 6,080      |   |   |          |  |   |           |  |   |        |  |   |            |   |   | -         |  
|Legal parent company shares issued and outstanding
      at       |  |            |   |   |        |   |   |            |   |   |          |  |   |           |  |   |        |  |   |            |   |   |           |  
|time of reverse take-over- U.S. Cobalt Inc.; December             |  |            |   |   |        |   |   |            |   |   |          |  |   |           |  |   |        |  |   |            |   |   |           |  
|19, 2003                                                          |  | 2,274,616  |   |   | 2,275  |   |   | (2,275     | ) |   |          |  |   |           |  |   |        |  |   |            |   |   | -         |  
|Shares issued for acquisition of U.S. Geothermal Inc.-            |  |            |   |   |        |   |   |            |   |   |          |  |   |           |  |   |        |  |   |            |   |   |           |  
|Idaho                                                             |  | 6,939,992  |   |   | 6,940  |   |   | (6,940     | ) |   |          |  |   |           |  |   |        |  |   | (408,166   | ) |   | (408,166  | )
|Warrants issued for acquisition of U.S. Geothermal Inc.-          |  |            |   |   |        |   |   |            |   |   |          |  |   |           |  |   |        |  |   |            |   |   |           |  
|Idaho                                                             |  |            |   |   |        |   |   |            |   |   |          |  |   | 629,256   |  |   |        |  |   | (629,256   | ) |   | -         |  
|                                                                  |  |            |   |   |        |   |   |            |   |   |          |  |   |           |  |   |        |  |   |            |   |   |           |  
|Shares and warrants issued for cash at a price
      of $0.45 per |  |            |   |   |        |   |   |            |   |   |          |  |   |           |  |   |        |  |   |            |   |   |           |  
|share in a private placement, net of share issue
      costs of   |  |            |   |   |        |   |   |            |   |   |          |  |   |           |  |   |        |  |   |            |   |   |           |  
|$75,122 paid in cash and $25,437
      paid by issuance of        |  |            |   |   |        |   |   |            |   |   |          |  |   |           |  |   |        |  |   |            |   |   |           |  
|83,333 agents warrants- December 19, 2003                        |  | 3,322,221  |   |   | 3,322  |   |   | 959,230    |   |   |          |  |   | 457,326   |  |   |        |  |   |            |   |   | 1,419,878 |  
|Shares and warrants issued for conversion of
      notes at       |  |            |   |   |        |   |   |            |   |   |          |  |   |           |  |   |        |  |   |            |   |   |           |  
|$0.45 per share  February 20, 2004                               |  | 385,864    |   |   | 386    |   |   | 123,090    |   |   |          |  |   | 50,162    |  |   |        |  |   |            |   |   | 173,638   |  
|Stock options granted                                             |  |            |   |   |        |   |   | 296,081    |   |   |          |  |   |           |  |   |        |  |   |            |   |   | 296,081   |  
|                                                                  |  |            |   |   |        |   |   |            |   |   |          |  |   |           |  |   |        |  |   |            |   |   |           |  
|Foreign currency translation gain                                 |  |            |   |   |        |   |   |            |   |   |          |  |   |           |  |   | 35,792 |  |   |            |   |   | 35,792    |  
|                                                                  |  |            |   |   |        |   |   |            |   |   |          |  |   |           |  |   |        |  |   |            |   |   |           |  
|Net loss for the year                                             |  |            |   |   |        |   |   |            |   |   |          |  |   |           |  |   |        |  |   | (676,398   | ) |   | (676,398  | )
|                                                                  |  |            |   |   |        |   |   |            |   |   |          |  |   |           |  |   |        |  |   |            |   |   |           |  
|Balance, March 31, 2004                                           |  | 12,922,693 |   | $ | 12,923 |   | $ | 1,881,636  |   | $ | -        |  | $ | 1,136,744 |  | $ | 35,792 |  | $ | (1,878,729 | ) | $ | 1,188,366 |  

-20-

---

U.S. GEOTHERMAL INC.(A Development Stage Company)CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (Continued)FROM INCEPTION, FEBRUARY 26, 2002 TO MARCH 31, 2007(Stated in U.S. Dollars)

|                                                                 |  |            |  |   |        |  |   |            |   |   |             |  |   |            |   |   | ACCUM.   |   |   |            |   |   |            |  
|---------------------------------------------------------------- |  | ---------- |  | - | ------ |  | - | ---------- | - | - | ----------- |  | - | ---------- | - | - | -------- | - | - | ---------- | - | - | ---------- | -
|                                                                 |  | NUMBER     |  |   |        |  |   | ADDITIONAL |   |   | **CAPITAL** |  |   | STOCK      |   |   | OTHER    |   |   |            |   |   |            |  
|                                                                 |  | OF         |  |   |        |  |   | PAID-IN    |   |   | STOCK       |  |   | PURCHASE   |   |   | COMP.    |   |   | ACCUM.     |   |   |            |  
|                                                                 |  | SHARES     |  |   | AMOUNT |  |   | CAPITAL    |   |   | ISSUABLE    |  |   | WARRANTS   |   |   | INCOME   |   |   | DEFICIT    |   |   | TOTAL      |  
|                                                                 |  |            |  |   |        |  |   |            |   |   |             |  |   |            |   |   |          |   |   |            |   |   |            |  
|Balance, March 31, 2004                                          |  | 12,922,693 |  | $ | 12,923 |  | $ | 1,881,636  |   | $ | -           |  | $ | 1,136,744  |   | $ | 35,792   |   | $ | (1,878,729 | ) | $ | 1,188,366  |  
|                                                                 |  |            |  |   |        |  |   |            |   |   |             |  |   |            |   |   |          |   |   |            |   |   |            |  
|Shares and warrants issued for cash at a price
      of $0.66 in |  |            |  |   |        |  |   |            |   |   |             |  |   |            |   |   |          |   |   |            |   |   |            |  
|a private placement, net of share issue costs
      of           |  |            |  |   |        |  |   |            |   |   |             |  |   |            |   |   |          |   |   |            |   |   |            |  
|$225,131 paid in cash and $133,341
      paid by the             |  |            |  |   |        |  |   |            |   |   |             |  |   |            |   |   |          |   |   |            |   |   |            |  
|issuance of 280,000 agents warrants- September
      17,        |  |            |  |   |        |  |   |            |   |   |             |  |   |            |   |   |          |   |   |            |   |   |            |  
|2004                                                             |  | 4,000,001  |  |   | 4,000  |  |   | 1,103,082  |   |   |             |  |   | 1,324,038  |   |   |          |   |   |            |   |   | 2,431,120  |  
|Shares issued for property at a price of $0.60- February         |  |            |  |   |        |  |   |            |   |   |             |  |   |            |   |   |          |   |   |            |   |   |            |  
|22, 2005                                                         |  | 100,000    |  |   | 100    |  |   | 60,251     |   |   |             |  |   |            |   |   |          |   |   |            |   |   | 60,351     |  
|Shares issued for stock options exercised                        |  | 308,735    |  |   | 309    |  |   | 145,133    |   |   |             |  |   |            |   |   |          |   |   |            |   |   | 145,442    |  
|Stock options granted                                            |  |            |  |   |        |  |   | 295,540    |   |   |             |  |   |            |   |   |          |   |   |            |   |   | 295,540    |  
|Foreign currency translation gain                                |  |            |  |   |        |  |   |            |   |   |             |  |   |            |   |   | 129,470  |   |   |            |   |   | 129,470    |  
|Net loss for the year                                            |  |            |  |   |        |  |   |            |   |   |             |  |   |            |   |   |          |   |   | (1,830,421 | ) |   | (1,830,421 | )
|Balance, March 31, 2005                                          |  | 17,331,429 |  |   | 17,332 |  |   | 3,485,642  |   |   | -           |  |   | 2,460,782  |   |   | 165,262  |   |   | (3,709,150 | ) |   | 2,419,868  |  
|Stock options granted                                            |  |            |  |   |        |  |   | 180,780    |   |   |             |  |   |            |   |   |          |   |   |            |   |   | 180,780    |  
|Expiration of stock purchase warrants                            |  |            |  |   |        |  |   | 1,061,145  |   |   |             |  |   | (1,061,145 | ) |   |          |   |   |            |   |   | -          |  
|Shares issued for stock options and warrants
      exercised     |  | 812,415    |  |   | 812    |  |   | 526,753    |   |   |             |  |   | (75,599    | ) |   |          |   |   |            |   |   | 451,966    |  
|Stock issued as result of employment agreements                  |  | 120,000    |  |   | 120    |  |   | 83,880     |   |   |             |  |   |            |   |   |          |   |   |            |   |   | 84,000     |  
|Foreign currency translation loss                                |  |            |  |   |        |  |   |            |   |   |             |  |   |            |   |   | (165,262 | ) |   | 32,792     |   |   | (132,470   | )
|Capital stock issuable as result of a private placement to       |  |            |  |   |        |  |   |            |   |   |             |  |   |            |   |   |          |   |   |            |   |   |            |  
|be closed April 3, 2006                                          |  |            |  |   |        |  |   |            |   |   | 20,134,260  |  |   |            |   |   |          |   |   |            |   |   | 20,134,260 |  
|Stock compensation liability                                     |  |            |  |   |        |  |   | (383,510   | ) |   |             |  |   | (1,324,038 | ) |   |          |   |   |            |   |   | (1,707,548 | )
|                                                                 |  |            |  |   |        |  |   |            |   |   |             |  |   |            |   |   |          |   |   |            |   |   |            |  
|Net loss for the year                                            |  |            |  |   |        |  |   |            |   |   |             |  |   |            |   |   |          |   |   | (1,523,385 | ) |   | (1,523,385 | )
|                                                                 |  |            |  |   |        |  |   |            |   |   |             |  |   |            |   |   |          |   |   |            |   |   |            |  
|Balance, March 31, 2006                                          |  | 18,263,844 |  | $ | 18,264 |  | $ | 4,954,690  |   | $ | 20,134,260  |  | $ | -          |   | $ | -        |   | $ | (5,199,743 | ) | $ | 19,907,471 |  

-21-

---

U.S. GEOTHERMAL INC.(A Development Stage Company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (Continued)

FROM INCEPTION, FEBRUARY 26, 2002 TO MARCH 31, 2007(Stated in U.S. Dollars)

|                                                     |  |            |  |   |        |  |   |            |   |   |             |   |   |            |   |   | ACCUM. |  |   |            |   |   |            |  
|---------------------------------------------------- |  | ---------- |  | - | ------ |  | - | ---------- | - | - | ----------- | - | - | ---------- | - | - | ------ |  | - | ---------- | - | - | ---------- | -
|                                                     |  | NUMBER     |  |   |        |  |   | ADDITIONAL |   |   | CAPITAL     |   |   | STOCK      |   |   | OTHER  |  |   |            |   |   |            |  
|                                                     |  | OF         |  |   |        |  |   | PAID-IN    |   |   | STOCK       |   |   | PURCHASE   |   |   | COMP.  |  |   | ACCUM.     |   |   |            |  
|                                                     |  | SHARES     |  |   | AMOUNT |  |   | CAPITAL    |   |   | ISSUABLE    |   |   | WARRANTS   |   |   | INCOME |  |   | DEFICIT    |   |   | TOTAL      |  
|                                                     |  |            |  |   |        |  |   |            |   |   |             |   |   |            |   |   |        |  |   |            |   |   |            |  
|                                                     |  |            |  |   |        |  |   |            |   |   |             |   |   |            |   |   |        |  |   |            |   |   |            |  
|Balance, March 31, 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                       |  | 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, as restated (note
      11) |  |            |  |   |        |  |   |            |   |   |             |   |   |            |   |   |        |  |   | (1,942,884 | ) |   | (1,942,884 | )
|                                                     |  |            |  |   |        |  |   |            |   |   |             |   |   |            |   |   |        |  |   |            |   |   |            |  
|Balance, March 31, 2007                              |  | 43,810,512 |  | $ | 43,811 |  | $ | 25,781,832 |   | $ | -           |   | $ | -          |   | $ | -      |  | $ | (7,142,623 | ) | $ | 18,683,020 |  

The accompanying notes are an integral part of these consolidated
  financial statements.
  -22-

---

U.S. GEOTHERMAL INC.(A Development Stage Company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTSMARCH 31, 2007(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, 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 roll-back of common stock.

The Company has been in the development stage since its formation
  and has not yet realized any revenues from its planned operations. GEO - Idaho
  operates for the purpose of acquiring geothermal properties and entered into
  an agreement with Vulcan Power Company (Vulcan) of Bend, Oregon,
  U.S.A., pursuant to which it acquired a 100% interest in the Raft River Geothermal
  Property located in Cassia County, Idaho, U.S.A. (Note 3).

Basis of Presentation

These consolidated financial statements are prepared in accordance
  with accounting principles generally accepted in the United States of America.
  The Company consolidates more-than-50% owned subsidiaries that it controls 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) | U.S. Cobalt Inc. (incorporated in the State of Colorado);                     
| | iv)  | U.S. Geothermal Services, LLC (incorporated in the State
        of Delaware).

All Company transactions are eliminated on consolidation.

Raft River Energy I LLC was consolidated through July 2006, after
  which the entity is recorded under the equity method. See Consolidation of Variable
  Interest Entity in Note 2 for further discussion.

Reclassification

Certain amounts from prior periods have been reclassified to
  conform to the current period presentation. This reclassification has resulted
  in no changes to the Companys accumulated deficit or net losses presented.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

-23-

---

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 and have been consistently applied
  in the preparation of the financial statements.

Development Stage Company

Pursuant to Statement of Financial Accounting Standards No. 7,
  Accounting and Reporting by Development Stage Enterprises (SFAS
  7), the Company is considered to be a development stage enterprise since its
  planned principal operations have not commenced. The various entities that comprised
  the Company prior to February 26, 2002 were not engaged in operations directly
  related to the development of geothermal power plants. After that time, the
  Company began its current and primary development activities, and accordingly,
  accounted for the accumulated deficit separately from the prior operations.
  The statements of operations, stockholders equity and cash flows present
  the accumulated activities from the inception of the current operating activities
  to present. This presentation will continue until the Company begins operations.

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 financial statements
  are published, and the reported amounts of revenues and expenses during the
  reporting period. Uncertainties with respect to such estimates and assumptions
  are inherent in the preparation of the Companys financial statements;
  accordingly, it is possible that the actual results could differ from these
  estimates and assumptions and could have a material effect on the reported amounts
  of the Companys financial position and results of operations.

Cash and Cash Equivalents

The Company considers all unrestricted cash, short term deposits,
  and other investments with 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 Notes 5 and 9. With the
  large value of funds invested in short term deposits, small variations in short
  term interest rates may materially affect the value of cash equivalents. Investments
  in government obligations accumulate higher interest, but the principal balance
  is not insured by the FDIC. All investments held by the Company are highly liquid,
  available on demand.

Concentration of Credit Risk

The Companys cash and cash equivalents consisted of commercial
  bank deposits, a money market account, and petty cash. The money market funds
  totaled $12,081,369, and are not subject to deposit insurance. Cash deposits
  are held in a commercial bank in Boise, Idaho, and in a commercial bank in Vancouver,
  British Columbia. The accounts in Idaho are guaranteed by the Federal Deposit
  Insurance Corporation (FDIC) up to $100,000. The Canadian dollar accounts in
  British Columbia are guaranteed by the Canadian Deposit Insurance Corporation
  (CIDC) up to $100,000 Canadian (approximately $86,000 in U.S. dollars at March
  31, 2007). At March 31, 2007, the Company exceeded the FDIC insured amount by
  approximately $53,800 and did not exceed the CIDC insured amount.

Consolidation of Variable Interest Entities

The Company has a significant interest in a Raft River Energy
  I, LLC (RREI), which has been

-24-

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determined to be a variable interest entity as defined by FASB
  Interpretation No. 46(R) (FIN 46(R)). RREIs purpose is to hold the financial
  interests of the first phase of the Raft River project for the construction
  of a 10 megawatt geothermal power plant. As described below, the Companys
  interest changed during the current fiscal period from primary beneficiary to
  a significant interest.

RREI resulted from agreements signed August 9, 2006, between
  U.S. Geothermal Inc. 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, U.S. Geothermal sold 50% of its ownership
  in Raft River Energy to Raft River Holdings. As a result of the agreements,
  U.S. Geothermal is required to contribute approximately $6,400,000 in cash and
  property, and Raft River Holdings is required to contribute $34,000,000 to Raft
  River Energy.

As of March 31, 2007, U.S. Geothermal Inc. has contributed $6,363,714
  in cash and property to the project, while Raft River Holdings has contributed
  $23,458,100. As a result, Raft River Holdings has been designated the primary
  beneficiary.

For periods prior to August 2006, U.S. Geothermal was the 100%
  owner of RREI and consolidated the loss of $30,968. For the period August 2006
  to March 2007, U.S. Geothermal recorded RREI under the equity method of accounting
  for investments in subsidiaries based on the capital contribution ratio at March
  31, 2007 (loss of $102,336).

RREIs financial information is summarized as follows:

As of November 24, 2006:Total current
        assets
      $
      3,417,793Property and equipment
      
      18,618,764Total assets
      $
      22,036,557Total current
        liabilities
      $
      3,360,052Members equity
      
      18,676,505Total liabilities and equity
      $
      22,036,557From inception on August 18, 2005 toNovember 24, 2006:Operating
        revenues
      $
      0Operating loss
      
      (245,879
      )Net loss
      
      (237,309
      )


Property, Plant and Equipment

Costs of acquisition of geothermal properties are capitalized
  on an area-of-interest basis. Geothermal properties include all direct costs
  for the acquisition of land rights, water rights and mineral rights. Amortization
  of these costs will be on a unit-of-production basis, based on estimated proven
  geothermal reserves should such reserves be found. If an area of interest is
  abandoned, the costs thereof are charged to income in the year of abandonment.
  With the inherent uncertainty of calculating the units of production for a renewable
  resource, revisions to the estimates and the subsequent field performance of
  the resource would cause the life of the resource to differ significantly from
  the estimated units of production. A large percentage increase or decrease in
  the estimated reserves would decrease or increase the depreciation, depletion
  or amortization of capital costs proportionately.

The Company expenses all costs related to the development of
  geothermal reserves prior to the establishment of proven and probable reserves.

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Depreciation will be based upon the estimated useful life of
  the asset. For assets directly related to revenue production defined by a specific
  contract, the estimated useful lives will not exceed the life of the contract.
  Depletion on wells and other assets directly involved in the extraction of the
  natural resources will be based upon the total estimated capacity on a unit
  of production basis. Units will be defined as gallons of geothermal water, processed
  through the plant, used directly in the production of revenues.

Other equipment is recorded at cost. Depreciation of other equipment
  is calculated on a straight-line basis at an annual rate of 30%.

Impairment of Long-Lived Assets

Statement of Financial Accounting Standards No. 144 Accounting
  for the Impairment or Disposal of Long-Lived Assets (SFAS 144) establishes
  a single accounting model for long-lived assets to be disposed of by sale including
  discontinued operations. SFAS 144 requires that these long-lived assets be measured
  at the lower of the carrying amount or fair value less cost to sell, whether
  reported in continuing operations or discontinued operations. The Company has
  adopted SFAS 144 and 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. As expected for the initial
  stages of the Companys operations, circumstances have not warranted the
  recognition of losses due to the impairment of long-lived assets.

Asset Retirement Obligations

Statement of Financial Accounting Standards No. 143, Accounting
  for Asset Retirement Obligations, requires legal obligations associated
  with the retirement of long-lived assets to be recognized at their fair value
  at the time the obligations are incurred. Upon initial recognition of a liability,
  that cost should be capitalized as part of the related long-lived asset and
  allocated to expense over the useful life of the asset. The Company has previously
  adopted this statement, with no impact to the Companys financial statements.

Stock Options Granted to Employees and Non-employees

On April 1, 2006, 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.

Under SFAS 123(R), the Company has elected to use the modified
  prospective transition method, and accordingly, the Companys consolidated
  financial statements for periods prior to adoption of SFAS 123(R) have not been
  restated to reflect, and do not include the impact of adopting.

For non-employee stock based compensation, the Company has 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.

-26-

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Pursuant to the requirements to SFAS 123(R), the Company made
  certain reclassifications to its consolidated balance sheet as of March 31,
  2006, to reflect the stock compensation liability that resulted from the issuance
  of stock options denominated in a foreign currency. The reclassification from
  shareholder equity to liabilities amounted to $1,707,548 at March 31, 2006.
  We account for stock-based compensation in accordance with SFAS No.123(R), Share-Based
  Payment. 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, including
  estimating expected dividends. 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.

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, 2007 and 2006,
  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, 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.

Foreign Currency Translation

The Companys functional currency is the U.S. dollar. Transactions
  in foreign currency are converted into U.S. dollars using the current method
  as follows:

- Monetary items at the rate prevailing at the balance sheet date;
- Non-monetary items at the historical exchange rate;
- Revenue and expenses at the average rate in effect during the applicable
    accounting period.

Adjustments arising from the translation of the foreign currency
  amounts are included as a separate component of stockholders equity.

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 foreign countries could disrupt the Companys operations.

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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, 2007, the Company had net deferred tax assets calculated
  at an expected rate of 34% of approximately $2,177,500 (March 31, 2006 - $1,568,000)
  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, 2007.
  The significant components of the deferred tax asset at March 31, 2007 and March
  31, 2006 were as follows:

|                                       |   | March 31,  |   |   | March 31,  |  
|-------------------------------------- | - | ---------- | - | - | ---------- | -
|                                       |   | 2007       |   |   | 2006       |  
|Net operating loss carry forward       | $ | 6,404,500  |   | $ | 4,612,100  |  
|                                       |   |            |   |   |            |  
|Deferred tax asset                     | $ | 2,177,500  |   | $ | 1,568,000  |  
|Deferred tax asset valuation allowance |   | (2,177,500 | ) |   | (1,568,000 | )
|Net deferred tax asset                 | $ | -          |   | $ | -          |  

At March 31, 2007, the Company has net operating loss carry forwards
  of approximately $6,404,500 ($4,612,100 in March 31, 2006), which expire in
  the years 2023 through 2027. The change in the allowance account from March
  31, 2006 to March 31, 2007 was $609,500.

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.

Going Concern

Based on the Companys projected spending over the next
  12 months, the $20,134,260 cash received from the private placement completed
  April 3, 2006, and the private placement completed in June 2007 (details provided
  in footnote 10), the Companys auditors have removed the going concern
  qualification from the Companys financial statements. Management believes
  that sufficient funding will be available to meet its business objectives, including
  anticipated cash needs for working capital, and financing for construction of
  the phase one power plant. As shown in the accompanying consolidated financial
  statements, the Company has incurred an accumulated deficit of $7,142,623 and
  has no revenue from operations. In the ordinary course of constructing a power
  plant facility of this size and complexity, cost overruns and contract delays
  can significantly affect the economics of the project. Failure to achieve commercial
  operations of the power plant prior to December 31, 2008 would jeopardize the
  production tax credit, and could materially affect the ability of U.S. Geothermal
  to operate as a going concern.

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Accounting Pronouncements - Recent

The Fair Value Option for Financial Assets and Financial
  Liabilities

In February 2007, the FASB issued Statement of Financial Accounting
  Standards No. 159, The Fair Value Option for Financial Assets and Financial
  Liabilities (SFAS 159). This statement permits entities to choose to measure
  many financial instruments and certain other items at fair value. The objective
  is to improve financial reporting by providing entities with the opportunity
  to mitigate volatility in reported earnings caused by measuring related assets
  and liabilities differently without having to apply complex hedge accounting
  provisions. This Statement is expected to expand the use of fair value measurement,
  which is consistent with the Boards long-term measurement objectives for
  accounting for financial instruments. This Statement is effective as of the
  beginning of an entitys first fiscal year that begins after November 15,
  2007, although early adoption is permitted. Management is currently evaluating
  the potential impact of the adoption of this statement on the financial position,
  results of operations and cash flows of the Company. Management has not elected
  early adoption of this statement.

Defined Benefit Pension and Other Postretirement Plans

In September, 2006, the Financial Accounting Standards Board
  issued Statement of Financial Accounting Standards No. 158, Employers
  Accounting for Defined Benefit Pension and Other Postretirement Plans 
  an amendment of FASB Statements No. 87,88,106, and 132(R) (SFAS No. 158).
  This statement requires an employer to recognize the overfunded or underfunded
  statues of a defined benefit postretirement plan (other than a multiemployer
  plan) as an asset or liability in its statement of financial position and to
  recognize changes in that funded status in the year in which the changes occur
  through comprehensive income of a business entity or changes in unrestricted
  net assets of a not for profit organization. This statement also requires an
  employer to measure the funded status of a plan as of the date of its year end
  statement of financial position, with limited exceptions. The adoption of this
  statement had no immediate material effect on the Companys financial condition
  or results of operations.

Fair Value Measurements

In September 2006, the FASB issued Statement of Financial Accounting
  Standards No. 157, Fair Value Measurements (SFAS 157). This statement
  defines fair value as used in numerous accounting pronouncements, establishes
  a framework for measuring fair value in generally accepted accounting principles
  and expands disclosure related to the use of fair value measures in financial
  statements. The statement is to be effective for financial statements issued
  in 2008; however, earlier application is encouraged. The Company is currently
  evaluating the timing of adoption and the impact that adoption might have on
  its financial position or results of operations.

Accounting for Uncertainty in Income Taxes

In June 2006, the FASB issued FASB Interpretation No. 48, Accounting
  for Uncertainty in Income Taxes (FIN 48). The interpretation clarifies
  the accounting for uncertainty in income taxes recognized in a company's financial
  statements in accordance with SFAS 109. Specifically, the pronouncement prescribes
  a recognition threshold and a measurement attribute for the financial statement
  recognition and measurement of a tax position taken or expected to be taken
  in a tax return. The interpretation also provides guidance on the related derecognition,
  classification, interest and penalties, accounting for interim periods, disclosure
  and transition of uncertain tax positions. The interpretation is effective for
  fiscal years beginning after December 15, 2006. The Company does not expect
  the adoption of FIN 48 to have a material impact on the Company's consolidated
  financial position, results of operations, cash flows or financial statement
  disclosures.

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NOTE 3 - REVERSE TAKE-OVER

Effective December 19, 2003, GTH acquired 100% of the issued
  and outstanding voting shares of GEO - Idaho by issuing 6,939,992 common shares
  and 2,420,217 share purchase warrants, of which 2,150,309 common shares and
  no share purchase warrants were held in escrow as at December 31, 2005 (as of
  March 31, 2005, 4,243,325 common shares and 1,946,937 share purchase warrants
  were held in escrow). Each share purchase warrant entitled the holder to purchase
  one additional common share at a price of $0.75 per share until December 19,
  2005. As of December 31, 2005, the 2,420,217 stock purchase warrants noted above
  expired without exercise. Since the transaction resulted in the former shareholders
  of GEO - Idaho owning the majority of the issued shares of GTH, the transaction,
  which is referred to as a reverse take-over, has been treated for
  accounting purposes as an acquisition by GEO - Idaho of the net assets and liabilities
  of GTH. Under this purchase method of accounting, the results of operations
  of GTH are included in these financial statements from December 19, 2003. GEO
  - Idaho is deemed to be the purchaser for accounting purposes. Accordingly,
  its net assets are included in the balance sheet at their previously recorded
  values.

The Company determined that the share purchase warrants issued
  as part of the aforementioned transaction have a fair value of $629,256 as determined
  by using the Black-Scholes pricing model with the assumptions as stated in Note
  6. The amount is considered to be additional consideration given to the former
  GEO - Idaho shareholders and, as such, was allocated, along with the net liabilities
  assumed of GTH, to accumulated deficit. The acquisition is summarized as follows:

| | Current assets (including cash of $5,798) | $ | 11,616   |  
| | ----------------------------------------- | - | -------- | -
| | Current liabilities                       |   | (419,782 | )
| | Net liabilities assumed                   | $ | (408,166 | )

The net liabilities assumed have been charged to accumulated
  deficit.

NOTE 4 - PROPERTY, PLANT AND EQUIPMENT

During the year ended March 31, 2007, the Company incurred an
  additional $12,084,849 in construction costs for Raft River Project phase I.
  These costs were primarily for the drilling of additional wells and the construction
  of the power plant and related infrastructure. Raft River Holdings reimbursed
  the Company for $4,917,100 in amounts associated with Raft River Energy phase
  I. As described in note 2, property (both geothermal property and construction
  in process) was transferred to Raft River Energy, in exchange Companys
  interest in the subsidiary that amounted to $6,363,714. In addition to construction
  activities, the Company acquired 1,083 acres of surface rights in exchange for
  cash payments of $1,281,006 and 631 acre feet per annum in water rights for
  $138,820. Legal fees for $87,121 were incurred for the acquisition of mineral
  rights. The Company acquired access to 5,409 acres of surface, mineral and geothermal
  rights through a lease payment of $15,000. Vehicles, furniture and computer
  equipment utilized by the corporate administrative and the Raft River site offices
  were purchased for $102,800.

For the year ended March 31, 2006, the Company acquired a 100%
  interest in the Raft River Geothermal Property by making cash payments totalling
  $250,000 in 2003, $225,000 in 2004 and the final instalment of $125,000 in 2005.
  The Company has also completed the requisite work program. In addition, the
  Company has paid $57,728 to acquire two purchase options on 1,083 acres of surface
  and water rights, and paid $949,036 to initiate construction of the Raft River
  Project.

Property, plant and equipment consisted of the following at the
  dates shown:

-30-

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|                               |   | Beginning     |  |   |           |  |   |           |        |   | Ending         | 
|------------------------------ | - | ------------- |  | - | --------- |  | - | --------- | ------ | - | -------------- | 
|                               |   | Balance       |  |   |           |  |   |           |        |   | Balance        | 
|                               |   | April 1, 2005 |  |   | Additions |  |   | Deletions |        |   | March 31, 2006 | 
|                               |   |               |  |   |           |  |   |           |        |   |                | 
|Land                           | $ | 124,000       |  | $ | 57,728    |  | $ | 0         |        | $ | 181,728        | 
|Geothermal and mineral rights  |   | 468,351       |  |   | 125,000   |  |   | 0         |        |   | 593,351        | 
|Furniture and equipment        |   | 5,325         |  |   | 0         |  |   | 0         |        |   | 5,325          | 
|Construction in progress, Raft |   |               |  |   |           |  |   |           |        |   |                | 
|River Project                  |   | 0             |  |   | 949,036   |  |   | 0         |        |   | 949,036        | 
|                               | $ | 597,676       |  | $ | 1,131,764 |  | $ | 0         |        |   | 1,729,440      | 
|                               |   |               |  |   |           |  |   |           |        |   |                | 
|Less: accumulated depreciation |   |               |  |   |           |  |   |           | (3,325 | )
|                               |   |               |  |   |           |  |   |           |        | $ | 1,726,115      | 

|                               |   | Beginning     |  |   |            |  |   |             |         |   | Ending         | 
|------------------------------ | - | ------------- |  | - | ---------- |  | - | ----------- | ------- | - | -------------- | 
|                               |   | Balance       |  |   |            |  |   |             |         |   | Balance        | 
|                               |   | April 1, 2006 |  |   | Additions  |  |   | *Deletions  |         |   | March 31, 2007 | 
|                               |   |               |  |   |            |  |   |             |         |   |                | 
|Land                           | $ | 181,728       |  | $ | 202,272    |  | $ | 0           |         | $ | 384,000        | 
|Water rights                   |   | 0             |  |   | 1,146,003  |  |   | 0           |         |   | 1,146,003      | 
|Geothermal and mineral rights  |   | 593,351       |  |   | 173,672    |  |   | (480,911    | )       |   | 286,112        | 
|Furniture and equipment        |   | 5,325         |  |   | 102,800    |  |   | 0           |         |   | 108,125        | 
|Construction in progress, Raft |   |               |  |   |            |  |   |             |         |   |                | 
|River Project                  |   | 949,036       |  |   | 12,084,849 |  |   | (10,799,903 | )       |   | 2,233,982      | 
|                               | $ | 1,729,440     |  | $ | 13,709,596 |  | $ | (11,280,814 | )       |   | 4,158,222      | 
|                               |   |               |  |   |            |  |   |             |         |   |                | 
|Less: accumulated depreciation |   |               |  |   |            |  |   |             | (19,836 | )
|                               |   |               |  |   |            |  |   |             |         | $ | 4,138,386      | 

* - For the period from April 1, 2006 until the signing of
  the joint venture agreement with Raft River Holdings (consolidation period),
  Raft River Energy I LLC was consolidated into the financial statements of U.S.
  Geothermal. During the consolidation period, U.S.

Geothermal provided $1,363,714 in property and $9,917,100
  in cash. Raft River Energy used the cash and property to begin construction
  of the Unit 1 power plant. At the date of de-consolidation, $11,280,814 in Unit
  1 property was reflected as a U.S. Geothermal asset. After de-consolidation,
  the property was eliminated and replaced with $6,363,714 in investments in the
  affiliate and $4,917,100 in cash that was reimbursed by our partner.

NOTE 5 - CAPITAL STOCK

The Company is authorized to issue 100,000,000 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, 2007, the Company issued 62,500
  common shares upon the exercise of 12,500 stock options, plus 50,000 broker
  compensation options at an exercise price of $1.00 CDN ($0.83 U.S.).

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During the quarter ended December 31, 2006, the Company issued
  72,741 shares to employees in satisfaction of employment agreements at an average
  price of $0.90, and 23,573 shares previously held in escrow were cancelled and
  returned to treasury.

During the quarter ended September 30, 2006, the Company issued
  395,000 common shares upon the exercise of 280,000 stock purchase warrants at
  an exercise price of $0.85 CDN ($0.73 -$0.75 U.S.), the exercise of 15,000 stock
  purchase warrants at an exercise price of $1.25 CDN ($0.86 U.S.), and the exercise
  of 100,000 options at an exercise price of $0.60 CDN ($0.54 U.S.).

During the quarter ended June 30, 2006, the Company issued 40,000
  common shares upon the exercise of 40,000 options at an exercise price of $0.60
  CDN ($0.53 U.S.).

On April 3, 2006, the Company completed a private placement of
  25,000,000 common shares at a price of $1.00 CDN ($0.86 U.S. as of April 3,
  2006). Proceeds, net of financing fees, totaled $20,134,260. Of the net proceeds,
  $172,370 had been received in the Companys bank accounts prior to year
  end. Since the subscription forms reflected a March 30, 2006 date, and the remainder
  of the cash of $19,961,890 was on deposit with Dundee Securities Corporation,
  the private placement was recorded as Private placement proceeds receivable
  and as Capital Stock Issuable in the financial statements at March
  31, 2006.

During the quarter ended March 31, 2006, the Company issued 691,304
  common shares upon the exercise of 378,370 options at an exercise price of $0.60
  CDN ($0.51 U.S.), the exercise of 192,934 stock purchase warrants at an exercise
  price of $0.75 U.S., and 120,000 common shares as a signing bonus as part of
  an employment agreement at a deemed price of $0.72 CDN ($0.61 U.S.).

During the quarter ended December 31, 2005, the Company issued
  183,333 common shares upon the exercise of 100,000 options at an exercise price
  of $0.60 CDN ($0.51 U.S.) and 83,333 purchase warrants at an exercise price
  of $0.45 U.S.

During the quarter ended September 30, 2005, the Company issued
  40,000 common shares upon the exercise of 40,000 options at an exercise price
  of $0.60 CDN ($0.51 U.S.).

During the quarter ended June 30, 2005, the Company issued 17,778
  common shares upon the exercise of 17,778 options at an exercise price of $0.90
  CDN ($0.73 U.S.).

Escrow Shares and Warrants

The following common shares are in escrow at the dates shown:

March 31,
      
      
      March 31,2007
      
      
      2006Common shares
      
      0
      
      
      2,150,309Share purchase warrants
      
      0
      
      
      0


The escrow shares and warrants were held in escrow pursuant to
  standard requirements of the TSX Venture Exchange, which required that escrow
  conditions be placed upon the shares and share purchase warrants issued in conjunction
  with the acquisition of GEO - Idaho and the concurrently completed private placement,
  noted above. Shares were released from escrow at six month intervals, with the
  last release from escrow completed December 19, 2006. All stock purchase warrants
  previously held in escrow expired as of December 31, 2005, without exercise.

-32-

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NOTE 6 - STOCK BASED COMPENSATION

The Companys stock option plan provides for the grant of
  incentive stock options for up to 4,381,051 common shares to employees, consultants,
  officers and directors of the Company. All terms and conditions of the options
  are the same for external parties as well as internal employees and directors.
  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 no conditions
  precedent to vesting. Since the plan has been administered by the Companys
  Vancouver office and Pacific Corporate Trust Company, the Company has issued
  stock options with an exercise price stated in Canadian dollars per share.

U.S. Geothermal and their Board of Directors have previously
  provided additional incentive to our United States (U.S.A.) employees
  and consultants by offering stock options at a discount off market price as
  allowed by the TSX Venture exchange. The U.S.A. legislature and the Internal
  Revenue Service (IRS) are now issuing regulations to dissuade companies
  from granting these discounted stock options. Through the American Jobs Creation
  Act of 2004 and the Internal Revenue Code Section 409A, discounted stock options
  have now been classified as deferred compensation in which the discount
  is taxable at the date of vesting, instead of upon the date of exercise. They
  have also dictated that a 20% penalty on all discounts is to be paid at date
  of vesting. These new rules have been retroactively applied to all options vesting
  after January 1, 2005.

Since U.S. Geothermal stock options vest 25% on date of grant
  and 25% every six months thereafter, option holders would be subject to amending
  tax returns for prior years and paying tax and penalty on the value of the discount.
  These amendment and payments would be required whether or not the option holder
  exercises the options. The IRS is allowing option holders until December 31,
  2007 to rectify the situation by allowing them to reprice the existing options
  to the market price on the date of option grant. As of March 31, 2007, the majority
  of our U.S.A. option holders have repriced their options to the market price
  on the date of grant. An adjustment to the fair market value of the repriced
  options was included in the stock compensation accrual for March 2007.

During the quarter ended March 31, 2007, the Company granted
  235,000 stock options to consultants and employees exercisable at a price of
  $1.40 CDN ($1.24 U.S.) until January 22, 2012.

During the quarter ended September 30, 2006, the Company granted
  170,000 stock options to consultants and employees exercisable at a price of
  $1.00 CDN ($0.89 U.S.) until July 31, 2011.

During the quarter ended June 30, 2006, the Company granted 1,763,000
  stock options to consultants, employees, directors and officers exercisable
  at prices ranging from $0.85 to $1.00 CDN ($0.77 to $0.90 U.S.) until April
  12, 2011.

During the year ended March 31, 2006, the Company granted 50,000
  stock options to a consultant exercisable at a price of $0.72 CDN ($0.58 U.S.).

During the year ended March 31, 2005, the Company granted 560,000
  stock options to consultants, directors and officers exercisable at prices ranging
  from $0.72 to $0.90 CDN ($0.58 to $0.72 U.S.).

During the year ended March 31, 2004, the Company granted 1,745,000
  stock options to consultants, directors and officers exercisable at a price
  of $0.60 CDN ($0.48 U.S.).

The changes in stock options are as follows:

-33-

---

|                                    |  | Number of    |   |   | Weighted       |  |   | Weighted   |  |   | Aggregate    |  
|----------------------------------- |  | ------------ | - | - | -------------- |  | - | ---------- |  | - | ------------ | -
|                                    |  | shares under |   |   | Average        |  |   | Average    |  |   | Intrinsic    |  
|                                    |  | options      |   |   | Exercise       |  |   | Fair Value |  |   | Value (US $) |  
|                                    |  |              |   |   | Price Per      |  |   | (US $)     |  |   |              |  
|                                    |  |              |   |   | Share          |  |   |            |  |   |              |  
|                                    |  |              |   |   |                |  |   |            |  |   |              |  
|                                    |  |              |   |   |                |  |   |            |  |   |              |  
|Balance outstanding, March 31, 2004 |  | 1,745,000    |   | $ | 0.60 CDN       |  | $ | 0.28       |  | $ | 495,489      |  
|Forfeited                           |  | (240,000     | ) |   | 0.60 CDN       |  |   | 0.30       |  |   | (70,880      | )
|Exercised                           |  | (308,735     | ) |   | 0.60 CDN       |  |   | 0.27       |  |   | (84,984      | )
|Granted                             |  | 560,000      |   |   | 0.85
      CDN |  |   | 0.45       |  |   | 250,408      |  
|Balance outstanding, March 31, 2005 |  | 1,756,265    |   |   | 0.68 CDN       |  |   | 0.34       |  |   | 590,033      |  
|Forfeited                           |  | (204,489     | ) |   | 0.63 CDN       |  |   | 0.31       |  |   | (64,037      | )
|Exercised                           |  | (536,148     | ) |   | 0.61 CDN       |  |   | 0.29       |  |   | (153,641     | )
|Granted                             |  | 50,000       |   |   | 0.72
      CDN |  |   | 0.54       |  |   | 26,791       |  
|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    |  

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 exercises and employee termination 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 weighted average fair value of options granted
  was $0.89 per share. The assumptions used to calculate the fair value are as
  follows:

|                        |  | Fiscal Years Ended | 
|----------------------- |  | ------------------ | 
|                        |  | 2007               | 
|                        |  |                    | 
|Dividend yield          |  | 0                  | 
|Expected volatility     |  | 82-149%            | 
|Risk free interest rate |  | 3.94-4.20%         | 
|Expected life (years)   |  | 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, 2007:

-34-

---

**OPTIONS OUTSTANDING**
      
      **OPTIONS EXERCISABLE****REMAINING****EXERCISE**
      
      **NUMBER OF**
      
      **CONTRACTUAL**
      
      **NUMBER OF**PRICE
      
      **SHARES**
      
      **LIFE (YEARS)**
      
      **SHARES**$
      0.60CDN
      
      355,628
      
      1.91
      
      355,6280.72CDN
      
      197,500
      
      2.67
      
      197,5000.85 CDN
      
      20,000
      
      4.00
      
      15,0000.90CDN
      
      347,500
      
      2.67
      
      347,5001.00 CDN
      
      1,615,500
      
      4.00
      
      807,7501.15CDN
      
      165,000
      
      4.50
      
      82,5001.40 CDN
      
      235,000
      
      4.83
      
      58,750$
      0.96CDN
      
      2,936,128
      
      3.59
      
      1,864,628


The following table summarizes information about the stock options
  outstanding at March 31, 2006:

OPTIONS
        OUTSTANDING
      
      OPTIONS EXERCISABLEREMAININGEXERCISE
      
      NUMBER OF
      
      CONTRACTUAL
      
      NUMBER OFPRICE
      
      SHARES
      
      LIFE (YEARS)
      
      SHARES$
      0.60CDN
      
      495,628
      
      2.76
      
      495,6280.72CDN
      
      520,000
      
      3.67
      
      390,0000.90CDN
      
      50,000
      
      3.67
      
      37,500$
      0.67CDN
      
      1,065,628
      
      3.25
      
      923,128


A summary of the status of the Companys nonvested shares
  for the fiscal years ended March 31, 2007 and 2006, and changes during the years
  ended March 31, 2007 and 2006, are presented as follows:

|                          |  |            |   |   | Weighted        |  |   | Weighted   | 
|------------------------- |  | ---------- | - | - | --------------- |  | - | ---------- | 
|                          |  |            |   |   | Average Grant   |  |   | Average    | 
|                          |  | Number of  |   |   | Date Fair Value |  |   | Grant Date | 
|                          |  | shares     |   |   | Per Share       |  |   | Fair Value | 
|                          |  |            |   |   |                 |  |   |            | 
|Nonvested, March 31, 2005 |  | 719,066    |   | $ | 0.68 CDN        |  | $ | 0.34       | 
|Granted                   |  | 50,000     |   |   | 0.72 CDN        |  |   | 0.54       | 
|Vested                    |  | (386,566   | ) |   | 0.61 CDN        |  |   | 0.29       | 
|Forfeited                 |  | (240,000   | ) |   | 0.63 CDN        |  |   | 0.31       | 
|Nonvested, March 31, 2006 |  | 142,500    |   |   | 0.69 CDN        |  |   | 0.37       | 
|                          |  |            |   |   |                 |  |   |            | 
|Granted                   |  | 2,168,000  |   |   | 1.05 CDN        |  |   | 0.99       | 
|Vested                    |  | (1,094,000 | ) |   | 0.63 CDN        |  |   | 0.30       | 
|Forfeited                 |  | (145,000   | ) |   | 0.86 CDN        |  |   | 0.62       | 
|Nonvested, March 31, 2007 |  | 1,071,500  |   | $ | 0.96 CDN        |  | $ | 0.82       | 

As of March 31, 2007, there was $408,078 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 during the years
  ended March 31, 2007, 2006, and 2005, was $1,129,072, $166,773, and $295,540,
  respectively.

Stock Purchase Warrants

As at March 31, 2007, no share purchase warrants are outstanding.

-35-

---

During the quarter ended September 30, 2006, stock purchase warrants
  representing 3,985,001 common shares at an exercise price of $1.25 CDN expired
  without being exercised, stock purchase warrants representing 280,000 common
  shares at an exercise price of $0.85 CDN were exercised, and stock purchase
  warrants representing 15,000 common shares at an exercise price of $1.25 CDN
  were exercised.

During the year ended March 31, 2006, stock purchase warrants
  representing 4,081,327 shares at an exercise price of $0.75 expired without
  exercise, stock purchase warrants representing 192,934 common shares at an exercise
  price of $0.75 were exercised, and stock purchase warrants representing 83,333
  common shares at an exercise price of $0.45 were exercised.

NOTE 7 - RELATED PARTY TRANSACTIONS

At March 31, 2007 and March 31, 2006, the amounts of $9,510 and
  $10,083, respectively, are payable to directors and officers of the Company.
  These amounts are unsecured and due on demand.

At March 31, 2007, the Companys subsidiary Raft River Energy
  I, LLC owed the Company $154,277 for operating and maintenance expenses. The
  receivable balance is comprised of unsecured demand obligations due within the
  next year of operations.

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

Year Ended
      
      
      Year EndedMarch 31,
      
      
      March 31,2007
      
      
      2006Administrative services
      $
      20,563
      
      $
      19,584Director fees
      
      23,250
      
      
      21,500Consulting fees
      
      24,000
      
      
      24,960Legal fees
      
      -
      
      
      871Rent
      
      -
      
      
      13,863$
      67,813
      
      $
      80,778


NOTE 8 - 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 (GAAP).
  The material difference in respect to these financial statements between U.S.
  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.) are 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:

-36-

---

|Consolidated Balance Sheets |   | U.S. GAAPMarch 31,2007 |  |   | CanadianGAAPMarch 31, 2007 |  |   | U.S. GAAPMarch 31,2006 |  |   | CanadianGAAPMarch 31, 2006 | 
|--------------------------- | - | ---------------------- |  | - | -------------------------- |  | - | ---------------------- |  | - | -------------------------- | 
|Plant, Property & Equipment | $ | 4,138,386              |  | $ | 4,578,997                  |  | $ | 1,726,115              |  | $ | 2,166,726                  | 
|Total Assets                |   | 22,673,340             |  |   | 23,113,951                 |  |   | 21,895,933             |  |   | 22,336,544                 | 
|Stockholders Equity        |   | 21,216,878             |  |   | 21,657,489                 |  |   | 21,615,019             |  |   | 22,055,630                 | 
|Total Liabilities &         |   |                        |  |   |                            |  |   |                        |  |   |                            | 
|Stockholders Equity        |   | 22,673,340             |  |   | 23,113,951                 |  |   | 21,895,933             |  |   | 22,336,544                 | 

|**Consolidated Statements of** **Operations and** Comprehensive Loss |   | U.S. GAAP Year Ended March 31, **2007** |   |   | Canadian GAAP Year Ended March **31, 2007** |   |   | U.S. GAAP Year ended December **31, 2006** |   |   | Canadian **GAAP Year** **ended** December 31, 2006 |  
|-------------------------------------------------------------------- | - | --------------------------------------- | - | - | ------------------------------------------- | - | - | ------------------------------------------ | - | - | -------------------------------------------------- | -
|Exploration Expenditures                                             | $ | -                                       |   | $ | -                                           |   | $ | -                                          |   | $ | -                                                  |  
|Loss from Operations                                                 |   | (2,987,869                              | ) |   | (2,987,869                                  | ) |   | (1,663,069                                 | ) |   | (1,607,755                                         | )
|Net Loss                                                             |   | (1,792,584                              | ) |   | (1,792,584                                  | ) |   | (1,523,385                                 | ) |   | (1,468,071                                         | )

NOTE 9 - 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 leases provide for the
  following annual payments within the next five fiscal years:

Year EndingMarch
        31,2007
      $
      40,1002008
      
      45,4002009
      
      50,8002010
      
      53,8002011
      
      50,100Thereafter
      
      425,350


Power Sales Agreement

The Company has signed a 10 megawatt power purchase agreement
  with Idaho Power Company for sale of power generated from its planned phase
  one power plant. Sale of power generated from phase two power plants are currently
  under discussion. 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 are all contingent upon successful financing and construction of
  the power plant at Raft River.

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 for a lump sum price
  of $20,200,000 (exclusive of taxes). The Company expects the output of the plant
  will be used to meet power delivery requirements of the Companys agreements
  with Idaho Power Company. As part of the Ormat EPC Agreement, as amended, the
  Company has established a $1,000,000 letter of credit with Wells Fargo Bank
  to collateralize amounts committed by Ormat, but not paid by the Company. The
  amount will increase monthly until a maximum letter of credit amount of

-37-

---

$10,252,000 is reached. A $5,363,400 money market fund is pledged
  as collateral backing the letter of credit as of March 31, 2007, and is reported
  as restricted cash.

Partnership Agreement Construction Costs

Under the Amended and Restated Operating Agreement of Raft River
  Energy I LLC, dated as of August 9, 2006, among Raft River Energy I LLC, Raft
  River I Holdings, LLC and us, Raft River I Holdings, LLC, a subsidiary of The
  Goldman Sachs Group Inc., will contribute in staged payments a total of $34
  million in cash and we will contribute $5 million in cash and approximately
  $1.5 million in production and injection wells and geothermal leases to Raft
  River Energy I LLC, the Phase 1 project joint venture company. If total construction
  costs exceed budget, US Geothermal will contribute the required additional funding
  to the joint venture.

Office Lease

The Company leases general office space for an executive office
  in Boise at an annual cost of $31,051. The underlying lease is a year-to-year
  lease that expires on January 31, 2008.

NOTE 10 - SUBSQUENT EVENT

The Company entered into an agreement with a syndicate of Canadian
  investment dealers to underwrite a private placement of 6,818,182 shares of
  common shares at a cost of $2.20 CDN per share to raise gross proceeds of approximately
  $15 million in Canadian dollars ($13.5 million US Dollars). The Underwriters
  exercised their option to purchase an additional 2,272,727 common shares at
  the issue price under the offering which could provide aggregate proceeds of
  approximately $20 million in Canadian dollars ($18.8 million US Dollars). The
  proceeds will be used to fund current and future plant development. The offering
  closed June 5, 2007 and is subject to certain conditions including, but not
  limited to, the approval of the TSX Venture Exchange.

NOTE 11  FINANCIAL STATEMENT RESTATEMENT

The accompanying financial statements have been restated to accurately
  reflect the value of the services incurred by the Company in exchange for equity
  based compensation. The effect was to increase the net operating loss for the
  fiscal year ended March 31, 2007 by $150,300, the effect on earnings per share
  was less than $0.01 per share. There was no direct effect on income tax expense.
  The restatements did not impact the fiscal year ended March 31, 2006. The restatements
  increased the operating loss from inception to March 31, 2007 by the same amount
  noted for the fiscal year ended March 31, 2007.

| | Net operating loss originally reported for the fiscal year
      ended   |   |            |  
| | ------------------------------------------------------------------------ | - | ---------- | -
| | March 31,
      2007                                                     | $ | (1,792,584 | )
| | Change due to restatement of stock compensation expense                  |   | (150,300   | )
| | Net operating loss after the restatement for
      the fiscal year ended |   |            |  
| | March 31, 2007                                                           | $ | (1,942,884 | )

-38-

---

PART IV

Item 15. Exhibits, Financial Statement Schedules

EXHIBIT LIST

|EXHIBIT |                                                                                                                                                                                                                                                                                                                          
|------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|NUMBER  | DESCRIPTION                                                                                                                                                                                                                                                                                                              
|        |                                                                                                                                                                                                                                                                                                                          
|3.1     | Certificate
        of Incorporation of U.S. Cobalt Inc. (now known as U.S. Geothermal Inc.)
        (Incorporated by reference to exhibit 3.1 to the registrants Form
        SB-2 registration statement as filed on July 8, 2004)                                                                                    
|        |                                                                                                                                                                                                                                                                                                                          
|3.2     | Certificate
        of Domestication of Non-U.S. Corporation (Incorporated by reference to
        exhibit 3.2 to the registrants Form SB-2 registration statement
        as filed on July 8, 2004)                                                                                                                    
|        |                                                                                                                                                                                                                                                                                                                          
|3.3     | Certificate
        of Amendment of Certificate of Incorporation (changing name of U.S. Cobalt
        Inc. to U.S. Geothermal Inc.) (Incorporated by reference to exhibit 3.3
        to the registrants Form SB-2 registration statement as filed on
        July 8, 2004)                                            
|        |                                                                                                                                                                                                                                                                                                                          
|3.4     | Bylaws of U.S.
        Cobalt Inc. (now known as U.S. Geothermal Inc.) (Incorporated by reference
        to exhibit 3.4 to the registrants Form SB-2 registration statement
        as filed on July 8, 2004)                                                                                                          
|        |                                                                                                                                                                                                                                                                                                                          
|3.5     | Plan of Merger
        of U.S. Geothermal, Inc. and EverGreen Power Inc. (Incorporated by reference
        to exhibit 3.5 to the registrants Form SB-2 registration statement
        as filed on July 8, 2004)                                                                                                        
|        |                                                                                                                                                                                                                                                                                                                          
|3.6     | Amendment to
        Plan of Merger (Incorporated by reference to exhibit 3.6 to the registrants
        Form SB-2 registration statement as filed on July 8, 2004)                                                                                                                                                     
|        |                                                                                                                                                                                                                                                                                                                          
|4.1     | Form of Stock
        Certificate (Incorporated by reference to exhibit 4.1 to the registrants
        Form SB-2 registration statement as filed on July 8, 2004)                                                                                                                                                       
|        |                                                                                                                                                                                                                                                                                                                          
|4.2     | Form of Warrant
        Certificate (Incorporated by reference to exhibit 4.2 to the registrants
        Form SB-2 registration statement as filed on July 8, 2004)                                                                                                                                                     
|        |                                                                                                                                                                                                                                                                                                                          
|4.3     | Provisions Regarding
        Rights of Stockholders (Incorporated by reference to exhibit 4.3 to the
        registrants Form SB-2 registration statement as filed on July 8,
        2004)                                                                                                                             
|        |                                                                                                                                                                                                                                                                                                                          
|10.1    | Agreement between
        U.S. Geothermal Inc. and Vulcan Power Company dated December 3, 2002 regarding
        the acquisition of the Vulcan interest (Incorporated by reference to exhibit
        10.1 to the registrants Form SB-2 registration statement as filed
        on July 8, 2004)                        
|        |                                                                                                                                                                                                                                                                                                                          
|10.2    | Amendment No.
        1 dated November 15, 2003 to Agreement between U.S. Geothermal Inc. and
        Vulcan Power Company (Incorporated by reference to exhibit 10.2 to the
        registrants Form SB-2 registration statement as filed on July 8,
        2004)                                                     
|        |                                                                                                                                                                                                                                                                                                                          
|10.3    | Amendment No.
        2 to Agreement by and between U.S. Geothermal Inc. and Vulcan Power
        Company dated December 30, 2003 (Incorporated by reference to exhibit
        10.3 to the registrants Form SB-2 registration statement as filed
        on July 8, 2004)                                            
|        |                                                                                                                                                                                                                                                                                                                          
|10.4    | Geothermal Lease
        and Agreement dated July 11, 2002, between Sergene Jensen, Personal Representative
        of the Estate of Harlan B. Jensen, and U.S. Geothermal Inc. (Incorporated
        by reference to exhibit 10.5 to the registrants Form SB-2 registration
        statement as filed on July 8, 2004)

-39-

---

|10.5  | Geothermal Lease
        and Agreement dated June 14, 2002, between Jensen Investments Inc. and
        U.S. Geothermal Inc. (Incorporated by reference to exhibit 10.6 to the
        registrants Form SB-2 registration statement as filed on July 8,
        2004)                                                                                                                                                        
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.6  | Geothermal Lease
        and Agreement dated March 1, 2004, between Jay Newbold and U.S. Geothermal
        Inc. (Incorporated by reference to exhibit 10.7 to the registrants
        Form SB-2 registration statement as filed on July 8, 2004)                                                                                                                                                                            
|      |                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.7  | Geothermal Lease
        and Agreement dated June 28, 2003, between Janice Crank and the children
        of Paul Crank and U.S. Geothermal Inc. (Incorporated by reference to exhibit
        10.8 to the registrants Form SB-2 registration statement as filed
        on July 8, 2004)                                                                                                                                    
|      |                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.8  | Geothermal Lease
        and Agreement dated December 1, 2004, between Reid S. Stewart and Ruth
        O. Stewart and US Geothermal Inc. (Incorporated by reference to exhibit
        10.9 to the registrants Amendment No. 2 to Form SB-2 registration
        statement as filed on January 10, 2005)                                                                                                                    
|      |                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.9  | Geothermal Lease
        and Agreement, dated July 5, 2005, between Bighorn Mortgage Corporation
        and US Geothermal Inc. (Incorporated by reference to exhibit 10.11 to
        the registrants Form 10-QSB quarterly report as filed on February
        17, 2006)                                                                                                                                                   
|      |                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.10 | Geothermal Lease
        and Agreement, dated June 23, 2005, among Dale and Ronda Doman, and US
        Geothermal Inc. (Incorporated by reference to exhibit 10.13 to the registrants
        Form 10-QSB quarterly report as filed on February 17, 2006)                                                                                                                                                                   
|      |                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.11 | Geothermal Lease
        and Agreement, dated June 23, 2005, among Michael and Cleo Griffin, Harlow
        and Pauline Griffin, Douglas and Margaret Griffin, Terry and Sue Griffin,
        Vincent and Phyllis Jorgensen, and Alice Mae Griffin Shorts, and US Geothermal
        Inc. (Incorporated by reference to exhibit 10.14 to the registrants
        Form 10- QSB quarterly report as filed on February 17, 2006)
|      |                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.12 | Geothermal Lease
        and Agreement dated January 25, 2006, between Philip Glover and US Geothermal
        Inc. (Incorporated by reference to exhibit 10.9 to the registrants
        Form 10-QSB quarterly report as filed on February 17, 2006)                                                                                                                                                                        
|      |                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.13 | Geothermal Lease
        and Agreement, dated May 24, 2006, between JR Land and Livestock Inc.
        and US Geothermal Inc. (Incorporated by reference to exhibit 10.30 to
        the registrants Form 10-KSB annual report as filed on June 29, 2006)                                                                                                                                                                    
|      |                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.14 | Administrative
        Services Contract, dated January 1, 2004, between U.S. Geothermal Inc.
        and New Dawn Holdings Ltd. (Incorporated by reference to exhibit 10.10
        to the registrants Form SB-2 registration statement as filed on
        July 8, 2004)                                                                                                                                                   
|      |                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.15 | Employment Agreement
        dated April 1, 2006, with Daniel J. Kunz (Incorporated by reference to
        exhibit 10.12 to the registrants Form 10-KSB annual report as filed
        on June 29, 2006)                                                                                                                                                                                                                    
|      |                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.16 | Employment Agreement
        dated April 1, 2006, with Kerry D. Hawkley (Incorporated by reference
        to exhibit 10.22 to the registrants Form 10-KSB annual report as
        filed on June 29, 2006)                                                                                                                                                                                                                  
|      |                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.17 | Employment Agreement
        dated April 1, 2006, with Douglas J. Glaspey (Incorporated by reference
        to exhibit 10.23 to the registrants Form 10-KSB annual report as
        filed on June 29, 2006)                                                                                                                                                                                                                
|      |                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.18 | Escrow Agreement
        made December 19, 2003, among U.S. Geothermal Inc., Pacific Corporate
        Trust Company, as escrow agent, and certain security holders (Incorporated
        by reference to exhibit 10.15 to the registrants Form SB-2 registration
        statement as filed on July 8, 2004)                                                                                                                

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|10.19 | Escrow Agreement
        made December 19, 2003, among U. S. Geothermal Inc., Pacific Corporate
        Trust Company, as escrow agent, and certain security holders (Incorporated
        by reference to exhibit 10.16 to the registrants Form SB-2 registration
        statement as filed on July 8, 2004)                                         
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                                         
|10.21 | First Amended
        and Restated Merger Agreement dated November 30, 2003 among U.S. Cobalt
        Inc., EverGreen Power Inc., U.S. Geothermal Inc., and the stockholders
        of U.S. Geothermal Inc. (Incorporated by reference to exhibit 10.17 to
        the registrants Form SB- 2 registration statement as filed on July
        8, 2004)
|      |                                                                                                                                                                                                                                                                                                                                                         
|10.22 | Agreement with
        Dundee Securities Corporation dated June 28, 2004 (Incorporated by reference
        to exhibit 10.18 to the registrants Form SB-2 registration statement
        as filed on July 8, 2004)                                                                                                                                     
|      |                                                                                                                                                                                                                                                                                                                                                         
|10.23 | Amended and Restated
        Stock Option Plan of U.S. Geothermal Inc. dated September 29, 2006.(Incorporated by reference to exhibit 10.23 to the registrants
        Form SB-2 registration statement as filed on October 2, 2006.)                                                                                                                  
|      |                                                                                                                                                                                                                                                                                                                                                         
|10.24 | Power Purchase
        Agreement dated December 29, 2004 between U.S. Geothermal Inc. and Idaho
        Power Company (Incorporated by reference to exhibit 10.19 to the registrants
        Amendment No. 2 to Form SB-2 registration statement as filed on January
        10, 2005)                                                                 
|      |                                                                                                                                                                                                                                                                                                                                                         
|10.25 | Engineering,
        Procurement and Construction Agreement dated December 5, 2005 between
        U.S. Geothermal Inc. and Ormat Nevada Inc. (Incorporated by reference
        to exhibit 10.28 to the registrants Form 10-QSB quarterly report
        as filed on February 17, 2006) *                                                             
|      |                                                                                                                                                                                                                                                                                                                                                         
|10.26 | Amendment to
        the Engineering, Procurement and Construction Agreement dated April 26,
        2006 between U.S. Geothermal Inc. and Ormat Nevada Inc. (Incorporated
        by reference to exhibit 99.1 to the registrants Form 8-K as filed
        on May 2, 2006)                                                                           
|      |                                                                                                                                                                                                                                                                                                                                                         
|10.27 | Letter of Intent
        from Eugene Water and Electric Board to U.S. Geothermal Inc. dated February
        22, 2006 (Incorporated by reference to exhibit 10.27 to the registrants
        Form SB-2 as filed on September 29, 2006).                                                                                                                
|      |                                                                                                                                                                                                                                                                                                                                                         
|10.28 | Renewable Energy
        Credits Purchase and Sales Agreement dated July 29, 2006 between Holy
        Cross Energy and U.S. Geothermal Inc. (Incorporated by reference to exhibit
        10.28 to the registrants Form SB-2 as filed on September 29, 2006).                                                                                         
|      |                                                                                                                                                                                                                                                                                                                                                         
|10.29 | Transmission
        Agreement dated June 24, 2005 between Department of Energys Bonneville
        Power Administration - Transmission Business Line and U.S. Geothermal
        Inc. (Incorporated by reference to exhibit 10.27 to the registrants
        Form 10-QSB quarterly report as filed on August 12, 2005)                               
|      |                                                                                                                                                                                                                                                                                                                                                         
|10.30 | Interconnection
        and Wheeling Agreement dated March 9, 2006 between Raft River Rural Electric
        Co-op and U.S. Geothermal Inc. (Incorporated by reference to exhibit 10.28
        to the registrants Form 10-KSB annual report as filed on June 29,
        2006)                                                                        
|      |                                                                                                                                                                                                                                                                                                                                                         
|10.31 | Construction
        Contract dated May 16, 2006 between Raft River Rural Electric Co-op and
        U.S. Geothermal Inc. (Incorporated by reference to exhibit 10.31 to the
        registrants Form SB-2 as filed on September 29, 2006).                                                                                                            
|      |                                                                                                                                                                                                                                                                                                                                                         
|10.32 | Membership Admission
        Agreement, dated August 9, 2006, among Raft River Energy I LLC, U.S. Geothermal
        Inc., and Raft River I Holdings, LLC (Incorporated by reference to exhibit
        10.1 to the registrants Form 8-K as filed on August 23, 2006) *                                                                                

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---

|10.33 | Amended and Restated
        Operating Agreement of Raft River Energy I LLC, dated as of August 9,
        2006, among Raft River Energy I LLC, Raft River I Holdings, LLC and U.S.
        Geothermal Inc (Incorporated by reference to exhibit 10.2 to the registrants
        Form 8-K as filed on August 23, 2006).*                                         
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                                                   
|10.34 | Management Services
        Agreement, dated as of August 9, 2006, between Raft River Energy I LLC
        and U.S. Geothermal Services, LLC (Incorporated by reference to exhibit
        10.3 to the registrants Form 8-K as filed on August 23, 2006) *                                                                                                       
|      |                                                                                                                                                                                                                                                                                                                                                                   
|10.35 | Construction
        contract dated May 22, 2006 between Industrial Builders and U.S. Geothermal
        Inc. (Incorporated by reference to exhibit 10.31 to the registrants
        Form 10- KSB annual report as filed on June 29, 2006)                                                                                                                       
|      |                                                                                                                                                                                                                                                                                                                                                                   
|10.36 | First Amendment
        to the Amended and Restated Operating Agreement of Raft River Energy I
        LLC, dated as of November 7, 2006, among Raft River Energy I LLC, Raft
        River I Holdings, LLC and U.S. Geothermal Inc. (Incorporated by reference
        to exhibit 10.36 to the registrants Form 10-QSB as filed on February
        20, 2007). *
|      |                                                                                                                                                                                                                                                                                                                                                                   
|23.1  | Consent
        of Williams & Webster, P.S.                                                                                                                                                                                                                                                                                                                       
|      |                                                                                                                                                                                                                                                                                                                                                                   
|23.2  | Consent of Morgan & Company                                                                                                                                                                                                                                                                                                                                       
|      |                                                                                                                                                                                                                                                                                                                                                                   
|31.1  | Certification
        of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002                                                                                                                                                                                                                                                
|      |                                                                                                                                                                                                                                                                                                                                                                   
|31.2  | Certification
        of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002                                                                                                                                                                                                                                                
|      |                                                                                                                                                                                                                                                                                                                                                                   
|32.1  | Certification
        of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002                                                                                                                                                                                                                                                
|      |                                                                                                                                                                                                                                                                                                                                                                   
|32.2  | Certification
        of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002                                                                                                                                                                                                                                                

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

-42-

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**SIGNATURES**

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

|                   | **U.S. Geothermal Inc.**                                                                       
|------------------ | -----------------------------------------------------------------------------------------------
|                   | (Registrant)                                                                                   
|                   |                                                                                                
|                   |                                                                                                
|September 26, 2007 | /s/ Daniel
      J. Kunz                                                                       
|Date               | Daniel J. Kunz
      Chief Executive Officer and President 
      (Principal Executive Officer)

---