CHANGE IN METHOD OF CONSOLIDATION OF SUBSIDIARY
 12 Months Ended
Mar. 31, 2012
CHANGE IN METHOD OF CONSOLIDATION OF SUBSIDIARY [Text Block]

NOTE 18 – CHANGE IN METHOD OF CONSOLIDATION OF SUBSIDIARY

Initially, Raft River Energy I LLC (“RREI”) was a wholly owned subsidiary of the Company and was recorded as a fully consolidated subsidiary into the Company’s financial statements. In 2006, Raft River I Holdings (“Holdings”), a subsidiary of the Goldman Sachs Group, acquired an equity interest by providing a significant capital investment in RREI under a tax equity structure. Subsequent accounting activity of RREI was reflected under the equity method on the Company’s consolidated financial statements.

Based on management’s annual review of the conditions and circumstances surrounding the relationship between the Company and Holdings, it was determined that the Company would no longer use the equity method to reflect the Company’s interest in RREI as of April 1, 2011. The Company will now fully consolidate RREI’s assets, liabilities and operations and recognize a non-controlling interest. When making this determination, Management analyzed whether control had shifted to the Company for accounting purposes, and noted that participation by Holdings is passive. The Board of Managers does not hold regular meetings, does not formally approve the annual operating budgets, and Holdings declines to contribute additional funds even when benefits can be shown. The Company has possession of and operates the facility, makes all day-to-day operating decisions, and contributes additional required capital repair funding as needed. Active participation in the operations of RREI is a primary role of the Company’s operating staff. The most critical point that has changed is the economics of the project due to the zero balance in the Raft River Holding’s tax capital account. Tax deductions associated with an additional $12.1 million equity contribution from the Company accelerated the exhaustion of the Holdings tax capital account to zero sooner than originally anticipated. The Company will be allocated 100% of the tax deductions and operating losses for the tax year 2011 and subsequent years. Since the current structure of RREI was established to allocate significant tax benefits to Holdings, the exhaustion of the Holdings tax capital account to zero demonstrates that the majority of the tax benefits have been monetized. Holdings no longer has any tax capital at risk. The Company is the only partner with tax capital at risk, so future operating decisions will primarily impact the Company.

The impact on the Company’s consolidated balance sheet and income statement of consolidating RREI is summarized as follows:

    U.S. Geothermal,           U.S. Geothermal  
    Inc. at March 31,     Consolidation of     Inc. at April 1,  
    2011     RREI     2011  
                   
ASSETS:                  
Current Assets:                  
Cash and cash equivalents $ 8,098,905   $ 592,330   $ 8,691,235  
Other current assets   1,624,101     517,970     2,142,071  
    9,723,006     1,110,300     10,833,306  
                   
Property and equipment, net of
accumulated depreciation 		  40,295,117     45,435,397     85,730,514  
Intangible assets, net of
accumulated amortization 		  16,957,708     -     16,957,708  
Investment in RREI   17,968,651     (17,968,651 )   -  
Other long-term assets   378,486     -     378,486  
  $ 85,322,968   $ 28,577,046   $ 113,900,014  
                   
LIABILITIES:                  
Current liabilities $ 1,185,637   $ 567,264   $ 1,752,901  
Long-term assets   18,326,802     -     18,326,802  
Total liabilities   19,512,439     567,264     20,079,703  
                   
                   
EQUITY:                  
U.S. Geothermal Inc.   65,169,562     -     65,169,562  
Non-controlling interest   640,967     28,009,782     28,650,749  
  $ 85,322,968   $ 28,577,046   $ 113,900,014  

 

The following information provides comparable consolidated information for the period prior to the change in control:

    U.S. Geothermal,           Restated U.S.  
    Inc. for the Year           Geothermal Inc. for  
    Ended March 31,     Consolidation of     the Year Ended  
    2011     RREI     March 31, 2011  
Plant Operations:                  
Energy sales $ 2,438,471   $ 3,837,278   $ 6,275,749  
Energy credit sales   79,569     433,598     513,167  
Land, water and mineral   196,893     (196,893 )   -  
Management fees   250,000     (250,000 )   -  
Gain from investment   288,612     (288,612 )   -  
Plant production expenses   (1,630,316 )   (2,697,331 )   (4,327,647 )
Net loss from plant operations   1,623,229     838,040     2,461,269  
                   
Operating Expenses:                  
Corporate administration   740,560     -     740,560  
Professional & management fees   1,128,993     -     1,128,993  
Salaries and wages   1,084,385     -     1,084,385  
Stock based compensation   1,066,565     -     1,066,565  
Travel and promotion   378,528     -     378,528  
Other plant expenses   1,129,993     2,183,771     3,313,764  
Other operating expenses   133,555     -     133,555  
Total Operating Expenses   5,662,579     2,183,771     7,846,350  
                   
Loss from Operations   (4,039,350 )   (1,345,731 )   (5,385,081 )
                   
Other Income   67,014     -     67,014  
                   
Net Loss   (3,972,336 )   (1,345,731 )   (5,318,067 )
                   
Net loss attributable to non- controlling interest   17,920     1,345,731     1,363,651  
                   
Net loss attributable to U.S. Geothermal Inc.   (3,954,416 )   -     (3,954,416 )
                   
Other comprehensive Income   (27,703 )   -     (27,703 )
                   
Comprehensive Loss attributable to U.S. Geothermal Inc. $ (3,982,119 ) $ -   $ (3,982,119 )

As the Company is presenting the income statement effective for the year ending March 31, 2012 retroactive to April 1, 2011, the quarterly income statement data is being provided in this footnote to clearly reflect the effects of consolidation from previous equity method presentation.

The following summary information presents the quarterly information as if reported under the current consolidation method

    For the Quarter Ended,  
    Restated     Original     Restated     Original     Restated     Original  
    12/31/2011     12/31/2011     9/30/2011     9/30/2011     6/30/2011     6/30/2011  
                                     
Net loss from Plant Operations $ (100,363 ) $ -   $ 421,852   $ -   $ (1,110,296 ) $ -  
                                     
Operating Revenues   -     759,846     -     823,008     -     808,259  
                                     
Total Operating Expenses   2,496,425     2,328,628     1,893,369     1,749,023     3,528,842     3,421,745  
                                     
Loss from Operations   (2,596,788 )   (1,568,782 )   (1,471,517 )   (926,015 )   (4,639,138 )   (2,613,486 )
                                     
Net Loss   (2,534,598 )   (1,506,786 )   (1,467,778 )   (922,581 )   (4,371,050 )   (2,345,700 )
                                     
Net Loss attributable to Non-controlling Interest   1,219,259     191,447     545,735     538     2,030,026     4,676  
                                     
Net Loss attributable to U.S. Geothermal Inc.   (1,315,339 )   (1,315,339 )   (922,043 )   (922,043 )   (2,341,024 )   (2,341,024 )