Genesis Financial 10-Q 12 Aug 14 2014 Q2 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	6 Months Ended
	Jun. 30, 2014	Jul. 22, 2014
Document and Entity Information	'	'
Entity Registrant Name	'Genesis Financial Inc	'
Document Type	'10-Q	'
Document Period End Date	30-Jun-14	'
Amendment Flag	'false	'
Entity Central Index Key	'0001183082	'
Current Fiscal Year End Date	'--12-31	'
Entity Common Stock, Shares Outstanding	'	12,075,120
Entity Filer Category	'Smaller Reporting Company	'
Entity Current Reporting Status	'Yes	'
Entity Voluntary Filers	'No	'
Entity Well-known Seasoned Issuer	'No	'
Document Fiscal Year Focus	'2014	'
Document Fiscal Period Focus	'Q2	'
Entity Incorporation, State Country Name	'Washington	'
Entity Incorporation, Date of Incorporation	24-Jan-02	'

GENESIS_FINANCIAL_INC_Condense

GENESIS FINANCIAL, INC. Condensed Balance Sheets (Interim period unaudited) (USD $)	Jun. 30, 2014		Dec. 31, 2013
CURRENT ASSETS:	'		'
Cash and cash equivalents	$56,431		$52,498
Interest and other receivables	92,316		85,103
Investments in real estate limited liability corporations	481,684		480,634
Loans held for sale	762,422		1,024,027
Real estate owned	107,233		392,885
Total current assets	1,500,086		2,035,147
NON-CURRENT ASSETS:	'		'
Long-term investments, at cost	1,250,000		1,250,000
Investments - available for sale	150,609		525,830
Real estate leasehold interest, net of accumulated amortization of $18,922 and $0 respectively	600,328		619,250
Rental Property, net of accumulated depreciation of $1,518 and $0, respectively	82,074		'
Office equipment, net of accumulated depreciation of $3,860 and $3,178 respectively	4,072		4,754
Total non-current assets	2,087,083		2,399,834
Total assets	3,587,169		4,434,981
CURRENT LIABILITIES:	'		'
Line of credit, affiliated company	1,310,000		1,415,000
Line of credit, bank	'		235,000
Note payable	41,182		62,699
Other current liabilities	19,948		31,878
Total current liabilities	1,371,130		1,744,577
LONG-TERM LIABILITIES:	'		'
Convertible note payable to officer	250,000		250,000
COMMITMENT AND CONTINGENCIES	0	[1]	0	[1]
STOCKHOLDERS' EQUITY:	'		'
Series B Preferred stock, $1.00 par value; 2,290,000 authorized, 1,649,500 issued and outstanding	1,649,500		1,649,500
Common stock, $.001 par value; 100,000,000 authorized, 12,075,120 and 11,575,120 issued and outstanding, respectively	12,075		11,575
Additional paid-in capital	6,576,785		6,463,293
Accumulated deficit	-5,912,930		-5,699,794
Accumulated other comprehensive income (loss)	-359,391		15,830
Total stockholders' equity	1,966,039		2,440,404
Total liabilities and stockholders' equity	$3,587,169		$4,434,981
[1]	Note 6

Statement_of_Financial_Positio

Statement of Financial Position - Parenthetical (USD $)	Jun. 30, 2014	Dec. 31, 2013
Statement of financial position	'	'
Preferred Stock, Par Value	$1	$1
Preferred Stock, Shares Authorized	2,290,000	2,290,000
Preferred Stock, Shares Issued	1,649,500	1,649,500
Preferred Stock, Shares Outstanding	1,649,500	1,649,500
Common Stock, Par Value	$0.00	$0.00
Common Stock, Shares Authorized	100,000,000	100,000,000
Common Stock, Shares Issued	12,075,120	11,575,120
Common Stock, Shares Outstanding	12,075,120	11,575,120
Accumulated depreciation, equipment	$3,860	$3,178
Accumulated depreciation, real estate leasehold interest	18,922	0
Accumulated depreciation, rental property	$1,518	$0

GENESIS_FINANCIAL_INC_Condense1

GENESIS FINANCIAL, INC. Condensed Statements of Operations and Comprehensive Income (Loss) (Unaudited) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
REVENUE:	'	'	'	'
Interest, processing fees and other income	$13,357	$42,185	$215,002	$95,536
Rental income	11,740	'	26,280	'
Net revenues	25,097	42,185	241,282	95,536
EXPENSES:	'	'	'	'
Fair value adjustment	281,575	'	281,575	'
Loss (income) on investment in real estate LLC	13,700	-4,316	25,855	28,184
Salaries	12,750	12,750	25,500	25,500
Interest expense, related party	5,041	5,041	10,082	10,082
Interest expense, other	1,511	2,823	4,155	2,927
Amortization	5,161	'	18,922	'
Depreciation	1,859	341	2,200	682
Rental property expense	4,303	'	10,526	'
Office occupancy and other	40,622	42,322	75,602	78,948
Total operating expenses	366,523	58,960	454,417	146,323
NET (LOSS)	-341,426	-16,775	-213,135	-50,787
COMPREHESIVE (LOSS):	'	'	'	'
Unrealized (loss) on available for sale securities	-73,904	-373,821	-375,222	-10,461
COMPREHESIVE (LOSS)	($415,330)	($390,596)	($588,357)	($61,248)
BASIC AND DILUTED (LOSS) PER SHARE	($0.03)	$0	($0.02)	$0
WEIGHTED AVERAGE SHARES: BASIC AND DILUTED	11,910,285	10,955,695	11,743,628	10,764,693

GENESIS_FINANCIAL_INC_Condense2

GENESIS FINANCIAL, INC. Condensed Statements of Cash Flows (Unaudited) (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Statement of cash flows	'	'
CASH FLOWS FROM OPERATING ACTIVITIES	$263,523	($372,105)
CASH FLOWS FROM INVESTING ACTIVITIES	0	0
CASH FLOWS FROM FINANCING ACTIVITIES:	'	'
Stock options exercised	100,000	'
Borrowings (repayment) line of credit with affiliate, net	-105,000	-20,000
Borrowings (repayment) from line of credit from bank, net	-235,000	250,000
(Repayment) of note payable	-19,590	'
Net cash provided (used) by financing activities	-259,590	230,000
NET DECREASE IN CASH AND CASH EQUIVALENT	3,933	-142,105
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	52,498	153,887
CASH AND CASH EQUIVALENTS AT END OF PERIOD	56,431	11,782
NONCASH TRANSACTIONS	'	'
Preferred stock converted to common stock	'	75,000
Contract converted to long term investment	'	353,857
Common stock issued for long term investment	'	265,393
Loans held for sale converted to REO or rental property	$86,717	$39,127

Note_1_Organization_and_Summar

Note 1 - Organization and Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2014
Notes	'
Note 1 - Organization and Summary of Significant Accounting Policies:	'
	NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
	Organization:
	Genesis Financial, Inc. (“the Company” or “GFI”) was incorporated in Washington State on January 24, 2002.  The Company is primarily engaged in the business of purchasing and selling real estate receivable loans, providing startup capital funding and periodically providing bridge capital funding.  Loans consist of real estate loans and mortgage notes collateralized by primarily first position liens on residential and commercial real estate.  The loans collateralized by real estate are typically non-conventional either because they are originated as a result of seller financing, or the underlying property is non-conventional.
	The Company invests in loans using investor funds, equity funds and funds generated from external borrowings including a line of credit facility from an affiliated stockholder.
	Summary of Significant Accounting Policies:
	Use of estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Significant estimates used herein include those relating to management’s estimate of fair value of loans held for sales, real estate owned, and long-term investments.  It is reasonably possible that actual results could differ from those and other estimates used in preparing these financial statements and such differences could be material.
	Fair value measurements - The following information for each class of assets and liabilities that are measured at fair value is disclosed:
	1.       the fair value measurement;
	2.       the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3);
	3.       for fair value measurements using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following:
	a.       total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings, and a description of where those gains or losses included in earnings  are reported in the statement of operations;
	b.       the amount of these gains or losses attributable to the change in unrealized gains or losses relating to those assets or liabilities still held at the reporting period date and a description of where those unrealized gains or losses are reported;
	c.        purchases, sales, issuances, and settlements (net); and
	d.       transfers into and/or out of Level 3.
	4.       the amount of the total gains or losses for the period in (3)(a) included in earnings that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date and a description of where those unrealized gains or losses are reported in the statement of operations; and
	in annual periods only, the valuation technique(s) used to measure fair value and a discussion of changes in valuation techniques, if any, during the period.
	Income tax – Deferred taxes are provided on the liability method whereby deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences.  Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets, subject to a valuation allowance, are recognized for future benefits of net operating losses being carried forward, at December 31, 2013 we have a loss carry forward of approximately $3 million.  The Company is expected to not have any tax liability in 2014.
	Earnings per share – Basic earnings per common share have been computed on the basis of the weighted-average number of common shares outstanding during the period presented.  Diluted earnings per common share are computed on the basis of the number of shares that are currently outstanding plus the number of shares that would be issued pursuant to outstanding warrants, stock options and common stock issuable on conversion of preferred stock unless such shares are deemed to be anti-dilutive.  The dilutive effect of convertible debt and outstanding securities, in periods of future income, would be as follows as of June 30, 2014 and June 30, 2013;
		June 30,
		2014	2013
	Stock options	761,000	1,261,000
	Convertible preferred stock	4,123,750	4,350,000
	Convertible debt	625,000	625,000
	Total possible dilution	5,509,750	6,236,000
	Reclassifications – Certain reclassifications have been made to conform prior periods’ data to the current presentation. These reclassifications have no effect on the results of reported operations or stockholders’ equity.

Note_2_Loans_Held_For_Sale

Note 2 - Loans Held For Sale	6 Months Ended
	Jun. 30, 2014
Notes	'
Note 2 - Loans Held For Sale:	'
	NOTE 2 — LOANS HELD FOR SALE:
	The Company's fair value of loans held for sale consisted of the following:
			June 30,		31-Dec-13
			2014
	Residential	$	324,741	$	361,779
	Land		10,338		61,669
	Commercial		277,343		600,579
	Other		150,000		-
	Total	$	762,422	$	1,024,027
	The following table presents a reconciliation of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the six months ended June 30, 2014 and 2013:
			June 30,
			2014		2013
	Beginning Balance	$	1,024,027	$	1,279,074
	New loans		150,000		378,857
	Principal payments received		-18,794		-38,980
	Proceeds on sale of loans		-70,291		-52,221
	Loss on sale of loans		-3,616		-
	Proceeds from loans paid in full		-397,641		-
	Gain on loan paid in full		166,300		-
	Converted to REO or Rental Property		-86,717		-39,127
	Converted to long term investment		-		-353,857
	Repossession Expenses		-846		19,863
	Ending Balance	$	762,422	$	1,193,609
	During the six months ended June 30, 2014, the Company sold five loans with a basis of $73,907 for $70,291 in cash. A loss of $3,616 was recognized. These loans were sold to a related party (see Note 8). Also during the first quarter 2014, $166,300 in income was recognized as a result of three loans carried at a discount being paid in full.

Note_3_Real_Estate_Owned

Note 3- Real Estate Owned	6 Months Ended
	Jun. 30, 2014
Notes	'
Note 3- Real Estate Owned:	'
	NOTE 3- REAL ESTATE OWNED:
	The Company's fair value of REO consisted of the following:
			June 30,		31-Dec-13
			2014
	Residential	$	-	$	12,764
	Land		103,222		379,857
	Commercial		4,010		264
	Total	$	107,232	$	392,885
	The following table presents the change in balance sheet carrying values associated with REO for the six months ended June 30, 2014 and 2013:
			June 30,
			2014		2013
	Beginning Balance	$	392,885	$	450,877
	REO transferred from loans held for sale		3,125		39,127
	Proceeds from sales of REO		-11,241		-
	Gain on sale of REO		2,511		-
	Fair value adjustment		-281,576		-
	Net change in holding costs		1,528		24,831
	Ending Balance	$	107,232	$	514,835
	During the six months ended June 30, 2014, the Company sold one REO with proceeds of $11,241 in cash. We transferred one loan held for sale to REO for $3,125. Also during the six month ended June 30, 2014, the company adjusted fair value on two REO totaling $(281,576).

Note_4_Other_Assets

Note 4 - Other Assets	6 Months Ended
	Jun. 30, 2014
Notes	'
Note 4 - Other Assets	'
	NOTE 4 — OTHER ASSETS:
	Long term investments:
	Flyback Energy, Inc.:
	On November 23, 2010, the Company closed the purchase of an equity interest in Flyback Energy, Inc., for $1,200,000.  The purchase was for 2,666,667 share of Series “B” Preferred Stock from Flyback Energy, Inc., a closely held Washington corporation payable on an installment basis.  On April 25, 2011, the Company purchased 85,274 shares of Series “C” Preferred Stock for $50,000 which is convertible at $.60 per share and bears a 5% dividend rate.
	The Flyback Series "B" Preferred shares are convertible into Flyback common shares on a one for one (1:1) basis and the conversion pricing is subject to adjustments for certain diluting issues of common stock, subdivisions or combinations of common stock, reclassifications, exchanges and/or substitutions of stock. The Company is due 421,480 shares of common stock because of the dilution provision.
	Flyback Energy, Inc. is a privately-held company that has developed a unique and proprietary electronic switch design that offers control over electrical power and magnetic fields.
	Investments in Available for Sale Securities:
	Ambient Water Corporation (Formerly AWG International Water Corp.):
	The Company purchased 109,906 shares of the AWG International Water Corp, a Nevada corporation, (“AWGI”) common stock for $500,000 ($250,000 each in 2010 and 2011).  In July 2012, AWGI was acquired by MIP Solutions, Inc. in a share exchange transaction (the "Acquisition").  In connection with this Acquisition, the Company’s 109,906 shares of AWGI common stock were converted into 7,380,433 shares of AWG International Water Corp (formerly MIP Solutions, Inc.)
	At June 30, 2014 the quoted market value of AWGI was $0.02 per share or $147,609 resulting in an unrealized loss of $73,804 and $369,022, respectively, for the three and six months periods ended June 30, 2014.   Total unrealized gain at June 30, 2014 is $352,391. The investment is measured using Level 1 fair value inputs.
	Gambit Energy Inc.:
	On February 4, 2013, the Company received 10,000 restricted common shares of Gambit Energy, Inc., a Nevada corporation ("GMEI") quoted on the OTC Markets.  The shares were issued as additional consideration for extending the due date of a loan held for sale relating to GMEI promissory note. On the date of the transaction, the fair value of GMEI shares was $10,000 which was recognized as loan fee income in 2013.
	At June 30, 2014, the quoted market value of the GMEI shares was $.30 per share or $3,000 resulting in an unrealized loss of $100 and $6,200, respectively, for the three and six month periods ended June 30, 2014. Total unrealized loss at June 30, 2014 is $7,000. The investment was measured using Level 1 fair value inputs.
	Investments in Real Estate Limited Liability Companies:
	At the end of 2012, the Company acquired investments in two Washington state real estate limited liability companies. In 2013, the Company contributed its investment in one real estate owned property with a basis of $51,600 to a newly form limited liability company in exchange for a 12.9% interest in the new company. At June 30, 2014 and 2013, these companies had a carrying value of $481,683 and $428,280, respectively.
	Some of the investments is accounted for using the equity method.  During the three months ended June 30, 2014 and 2013, the Company recorded a loss of $12,155 and $28,184, respectively, and the six months ended June 30, 2014 and 2013, the Company recorded a loss of $25,855 and $28,184, respectively which represents its portion of this real estate company’s loss for the same period. During the three months ended June 30, 2014 and 2013, the Company advanced $26,905 and $53,809 for property taxes and interest owing.
	Rental Properties:
	At the end of 2013, the Company foreclosed on a loan held for sale in Lebanon, Oregon through the bankruptcy courts, the property is currently being operated as Duffy’s Bar. The bar was subsequently leased on a three (3) year lease agreement for $1500 per month, with the tenant paying all utilities, property taxes and insurance. During the three and six months ended June 30, 2014 the company recognized $4,500 and $9,000 in rental income. This is a commercial building being depreciated over thirty-nine (39) years, the company recorded depreciation of $1,518 for the six month ended June 30, 2014 and will accrued at $179 per month.
	Real Estate Leasehold Interest:
	On May 31, 2013, the Company completed the acquisition of a real property leasehold interest in approximately 63 acres located in Dunn County, North Dakota, (the "Halliday Project").  The leasehold was acquired by assignment of a lease between Mr. Clint L. Lohman (“Lohman”), Lessee and the Lessors. The Halliday Project, as presently developed, consist of fifty (50) developed residential lots and undeveloped land. Mr. Lohman was elected as a director of GFI at the October 22, 2013 annual shareholder meeting.
	Lohman initially acquired the property in September 2012 and commenced development of fifty (50) RV/residential lots. Lohman invested $353,857 into the project.  The Company loaned Lohman an additional $353,857 which was used for project development.  The development is currently approved for a total of 100 lots in the city of Halliday, North Dakota.
	In 2013, the Company acquired Lohman's interest in the Halliday Project in a share exchange transaction. GFI issued 589,762 common shares valued at $0.45 per share for a value of $265,393. The Company also cancelled Lohman’s outstanding loan balance of $353,857 at the time of the share exchange. Total consideration for the leasehold interest was $619,250. The Company owns the Halliday Project leasehold interest and intends to complete the development of the additional 50 lots at an estimated cost of $300,000. The Company may place recreational vehicles, mobile homes, or construct cabins on the lots and offer them for rent or lease. At the three and six months ended June 30, 2014, the Company had five and seven lots leased and had rental income of $7,240 and $17,280.
	The lease consists of approximately 63 acres in the city of Halliday, North Dakota.  The lease term is fifteen (15) years and commenced on September 15, 2012.  The Company has an option to renew the lease for an additional 15 year term. The monthly rent on the lease is Fifty ($50.00) Dollars for each occupied and rented trailer, cabin or lot.  The Company is obligated to pay any and all real and personal property taxes, general taxes, special assessments and other charges levied against the property and its improvements.   During the lease term, the Company will own title to all of the improvements and personal property.  At the expiration of the lease or termination, all improvements and personal property located on the premises will revert to the Lessors.

Note_5_Lines_of_Credit

Note 5 - Lines of Credit	6 Months Ended
	Jun. 30, 2014
Notes	'
Note 5 - Lines of Credit	'
	NOTE 5 — LINES OF CREDIT:
	On June 27, 2012, GFI renewed a $250,000 line of credit, bearing five (5%) percent interest with Riverbank.  At June 30, 2014 the balance owing is $0. The line has a term of twelve months, and an origination fee of 1/2%, or $1,250. Accrued interest is paid monthly. The Riverbank line of credit is senior to the Coghlan Family Corporation, Inc. (“CFC”) line of credit and is collateralized by the assets of GFI.  On June 30, 2014 the line of credit was extended to July 1, 2015 at which time the loan renewed at a four and a half (4.5%) percent interest rate with a renewal fee of ½%, or $1,250. The Riverbank line requires that the CFC line may not be paid down lower than the amount owing to Riverbank at any time during the term of the loan.  The line is payable on demand and is personally guaranteed by John R. and Wendy Coghlan, related parties of the Company.
	The Company has a $2,500,000 Warehouse Line of Credit Promissory Note Agreement with the CFC, with a balance owing of $1,310,000 at June 30, 2014 and $1,415,000 at December 31, 2013. CFC is an affiliated company controlled by John R. Coghlan. At the time the agreement was made the default interest rate was twelve (12%) percent.  Interest was payable monthly. The line had a term of 12 months and an origination fee of 1/2% or $12,500. The credit line is collateralized by all of GFI’s assets and is subordinate to the Riverbank line of credit. The line of credit agreement required that the Company maintain a debt to equity ratio of no greater than 3.0. Borrowings under the line are personally guaranteed by Michael A. Kirk, the Secretary of the Company. Because of the economic conditions, CFC had agreed to waive the interest and origination fees starting October 1, 2010 and had also agreed to waive the 3.0 debt to equity ratio requirement as well as the 12% default rate.

Note_6_Notes_Payable

Note 6 - Notes Payable	6 Months Ended
	Jun. 30, 2014
Notes	'
Note 6 - Notes Payable	'
	NOTE 6 — NOTES PAYABLE
	Convertible note payable to officer: On December 15, 2010, the Company entered into a convertible note agreement with John R. Coghlan, a related party (see Note 8). The note accrues interest at eight (8%) percent per annum with interest and balance initially due on December 15, 2012.  The note is convertible at any time by Mr. Coghlan into one (1) share of the Company’s Series “B” Preferred stock for every $1.00 outstanding of the note payable and related accrued interest.  In connection with the issuance of this note, the Company recognized a beneficial conversion feature of $128,750 that resulted in a discount to the note payable. The discount was amortized into earnings over the initial term of the note and was fully amortized at December 31, 2012. The note is collateralized by 290,000 shares of the Company’s Series “B” Preferred stock. On October 16, 2012, the Company and Coghlan agreed to extend the due date of the note to December 15, 2016.
	Note payable: In 2013, the Company assumed a note payable totaling $62,699 relating to a loan it had made in 2005.   When the Company funded the loan in 2005, it sold 100% of its interest to various investors. During 2013, the Company began foreclosure proceedings on behalf of the investors because the borrower was delinquent on payments. During the proceedings, it was determined that the Company had failed to obtain first position in the underlying property and that a separate creditor was in first position. To uphold its agreement with the investors, the Company assumed the balance of the note with the creditor and recognized a loss for the entire amount in 2013. The term of the assumed note is until paid in full and monthly payments are $832. At June 30, 2014 the balance owing is $41,182.

Note_7_Series_B_Preferred_Stoc

Note 7 - Series "B" Preferred Stock	6 Months Ended
	Jun. 30, 2014
Notes	'
Note 7 - Series "B" Preferred Stock	'
	NOTE 7 — SERIES B PREFERRED STOCK
	On November 11, 2010 the Company filed Articles of Amendment to the Amended and Restated Articles of Incorporation creating 2,000,000 shares of Series B Preferred Stock.  The designated Series B Preferred Stock consists of 2,000,000 shares with a par value $1.00; is non-dividend bearing, convertible to Common Stock at $.40 per share subject to any recapitalization. The Company amended the share amount to 2,290,000. The holders of the Preferred Stock will be entitled to receive, prior and in preference to any Distributions of any assets of the Corporation to the holders of the Common Stock.  Each share of the Preferred Stock is convertible into two and one-half common stock shares at the option of the holder.  Each share of Series B Preferred Stock can automatically converted immediately prior to the closing of a firm commitment underwritten initial public offering pursuant to an effective registration statement filed under the Securities Act of 1933 or upon the receipt by the Corporation of a written request for such request for such conversion from the holders of the majority of the Series B Preferred Stock holders.
	As of June 30, 2014, there were 1,649,500 shares of Series B convertible Preferred stock outstanding.

Note_8_Relatedparty_Transactio

Note 8- Related-party Transactions	6 Months Ended
	Jun. 30, 2014
Notes	'
Note 8- Related-party Transactions	'
	NOTE 8 — RELATED-PARTY TRANSACTIONS:
	Related parties are defined as Officers, Directors, and/or those Shareholders owning or controlling more than 5% of the common stock of GFI, or any entities that are owned or controlled by Officers, Directors, and/or those Shareholders owning or controlling more than 5% of the common stock of GFI.
	Coghlan Family Corporation, Coghlan, LLC and West 3773 Fifth, LLC are controlled by John R. Coghlan, a Company director, CFO and majority shareholder. Coghlan Family Corporation is owned 100% by Coghlan, LLC, which is owned by the Coghlan family members. John R. and Wendy Coghlan (husband and wife) collectively own 35.65% of Coghlan, LLC and are co-managers. West 3773 Fifth, LLC is owned 100% by John and Wendy Coghlan (husband and wife). Genesis Financial Corporation is a company which is owned 100% by Michael Kirk, who is a director and officer of Genesis Financial, Inc. Genesis Financial, Inc. provides accounting, office services and supplies, and office space for his services provided to Genesis Financial Corporation.  The services are valued at $1,500 per month. Michael Lavigne is an officer and director of Placer Creek Mining Company. Mr. Lavigne is a director of Genesis Financial, Inc.
	In addition to transactions described in Notes 4, 5 and 6, Genesis Financial, Inc. had the following related party transactions for the quarter and six months ended June 30, 2014 and the year ended December 31, 2013.
	John R. Coghlan
	One June 14, 2013 and June 30, 2014 John R Coghlan personally guaranteed our Riverbank line of credit.
	On April 30, 2014, John R Coghlan exercise his option for 250,000 share of common stock at $0.20 per share or $50,000.
	Coghlan Family Corporation “CFC”
	On June 24, 2013, Coghlan Family Corporation purchased $52,221 interest in two loans held for sale by the Company.  No gain or loss was recognized on this sale because they were sold at its carrying value.
	There was no activity for the quarter ending June 30, 2014.
	Coghlan, LLC
	There was no activity for the years ending December 31, 2013 and for the quarter ended June 30, 2014.
	West 3773 Fifth, LLC
	As of June 30, 2014, the Company continued a month-to-month tenancy with 3773 West Fifth, LLC, a company owned and controlled by John and Wendy Coghlan. The monthly rent is $1,250.
	Genesis Finance Corporation “GFC”
	There was no activity for the year ending December 31, 2013.
	On January 31, 2014, GFC purchased $73,907 interest in five loans held for sale by the Company. The Company recognized a loss of $3,616 for the purchase.
	Michael Lavigne
	There was no activity for the year ending December 31, 2013.
	During the first quarter 2014, the Company loaned Placer Creek Mining Company $150,000.

Note_1_Organization_and_Summar1

Note 1 - Organization and Summary of Significant Accounting Policies: Use of Estimates (Policies)	6 Months Ended
	Jun. 30, 2014
Policies	'
Use of Estimates	'
	Use of estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Significant estimates used herein include those relating to management’s estimate of fair value of loans held for sales, real estate owned, and long-term investments.  It is reasonably possible that actual results could differ from those and other estimates used in preparing these financial statements and such differences could be material.

Note_1_Organization_and_Summar2

Note 1 - Organization and Summary of Significant Accounting Policies: Fair Value Measurements (Policies)	6 Months Ended
	Jun. 30, 2014
Policies	'
Fair Value Measurements	'
	Fair value measurements - The following information for each class of assets and liabilities that are measured at fair value is disclosed:
	1.       the fair value measurement;
	2.       the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3);
	3.       for fair value measurements using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following:
	a.       total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings, and a description of where those gains or losses included in earnings  are reported in the statement of operations;
	b.       the amount of these gains or losses attributable to the change in unrealized gains or losses relating to those assets or liabilities still held at the reporting period date and a description of where those unrealized gains or losses are reported;
	c.        purchases, sales, issuances, and settlements (net); and
	d.       transfers into and/or out of Level 3.
	4.       the amount of the total gains or losses for the period in (3)(a) included in earnings that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date and a description of where those unrealized gains or losses are reported in the statement of operations; and
	in annual periods only, the valuation technique(s) used to measure fair value and a discussion of changes in valuation techniques, if any, during the period.

Note_1_Organization_and_Summar3

Note 1 - Organization and Summary of Significant Accounting Policies: Income tax (Policies)	6 Months Ended
	Jun. 30, 2014
Policies	'
Income tax	'
	Income tax – Deferred taxes are provided on the liability method whereby deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences.  Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets, subject to a valuation allowance, are recognized for future benefits of net operating losses being carried forward, at December 31, 2013 we have a loss carry forward of approximately $3 million.  The Company is expected to not have any tax liability in 2014.

Note_1_Organization_and_Summar4

Note 1 - Organization and Summary of Significant Accounting Policies: Earnings Per Share, Policy (Policies)	6 Months Ended
	Jun. 30, 2014
Policies	'
Earnings Per Share, Policy	'
	Earnings per share – Basic earnings per common share have been computed on the basis of the weighted-average number of common shares outstanding during the period presented.  Diluted earnings per common share are computed on the basis of the number of shares that are currently outstanding plus the number of shares that would be issued pursuant to outstanding warrants, stock options and common stock issuable on conversion of preferred stock unless such shares are deemed to be anti-dilutive.  The dilutive effect of convertible debt and outstanding securities, in periods of future income, would be as follows as of June 30, 2014 and June 30, 2013;
		June 30,
		2014	2013
	Stock options	761,000	1,261,000
	Convertible preferred stock	4,123,750	4,350,000
	Convertible debt	625,000	625,000
	Total possible dilution	5,509,750	6,236,000

Note_1_Organization_and_Summar5

Note 1 - Organization and Summary of Significant Accounting Policies: Reclassifications (Policies)	6 Months Ended
	Jun. 30, 2014
Policies	'
Reclassifications	'
	Reclassifications – Certain reclassifications have been made to conform prior periods’ data to the current presentation. These reclassifications have no effect on the results of reported operations or stockholders’ equity.

Note_1_Organization_and_Summar6

Note 1 - Organization and Summary of Significant Accounting Policies: Earnings Per Share, Policy: Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Tables)	6 Months Ended
	Jun. 30, 2014
Tables/Schedules	'
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share	'
		June 30,
		2014	2013
	Stock options	761,000	1,261,000
	Convertible preferred stock	4,123,750	4,350,000
	Convertible debt	625,000	625,000
	Total possible dilution	5,509,750	6,236,000

Note_2_Loans_Held_For_Sale_Sch

Note 2 - Loans Held For Sale: Schedule of Other Assets (Tables)	6 Months Ended
	Jun. 30, 2014
Tables/Schedules	'
Schedule of Other Assets	'
			June 30,		31-Dec-13
			2014
	Residential	$	324,741	$	361,779
	Land		10,338		61,669
	Commercial		277,343		600,579
	Other		150,000		-
	Total	$	762,422	$	1,024,027

Note_2_Loans_Held_For_Sale_Sch1

Note 2 - Loans Held For Sale: Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Tables)	6 Months Ended
	Jun. 30, 2014
Tables/Schedules	'
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis	'
			June 30,
			2014		2013
	Beginning Balance	$	1,024,027	$	1,279,074
	New loans		150,000		378,857
	Principal payments received		-18,794		-38,980
	Proceeds on sale of loans		-70,291		-52,221
	Loss on sale of loans		-3,616		-
	Proceeds from loans paid in full		-397,641		-
	Gain on loan paid in full		166,300		-
	Converted to REO or Rental Property		-86,717		-39,127
	Converted to long term investment		-		-353,857
	Repossession Expenses		-846		19,863
	Ending Balance	$	762,422	$	1,193,609

Note_3_Real_Estate_Owned_Real_

Note 3- Real Estate Owned: Real Estate Owned, Disclosure of Detailed Components (Tables)	6 Months Ended
	Jun. 30, 2014
Tables/Schedules	'
Real Estate Owned, Disclosure of Detailed Components	'
			June 30,		31-Dec-13
			2014
	Residential	$	-	$	12,764
	Land		103,222		379,857
	Commercial		4,010		264
	Total	$	107,232	$	392,885

Note_3_Real_Estate_Owned_Chang

Note 3- Real Estate Owned: Change in balance sheet carrying values for real estate owned (Tables)	6 Months Ended
	Jun. 30, 2014
Tables/Schedules	'
Change in balance sheet carrying values for real estate owned	'
			June 30,
			2014		2013
	Beginning Balance	$	392,885	$	450,877
	REO transferred from loans held for sale		3,125		39,127
	Proceeds from sales of REO		-11,241		-
	Gain on sale of REO		2,511		-
	Fair value adjustment		-281,576		-
	Net change in holding costs		1,528		24,831
	Ending Balance	$	107,232	$	514,835

Note_1_Organization_and_Summar7

Note 1 - Organization and Summary of Significant Accounting Policies (Details)	6 Months Ended
	Jun. 30, 2014
Details	'
Nature of Operations	'Genesis Financial, Inc. (“the Company” or “GFI”) was incorporated in Washington State on January 24, 2002. The Company is primarily engaged in the business of purchasing and selling real estate receivable loans, providing startup capital funding and periodically providing bridge capital funding. Loans consist of real estate loans and mortgage notes collateralized by primarily first position liens on residential and commercial real estate. The loans collateralized by real estate are typically non-conventional either because they are originated as a result of seller financing, or the underlying property is non-conventional. The Company invests in loans using investor funds, equity funds and funds generated from external borrowings including a line of credit facility from an affiliated stockholder.
Entity Incorporation, State Country Name	'Washington
Entity Incorporation, Date of Incorporation	24-Jan-02

Note_1_Organization_and_Summar8

Note 1 - Organization and Summary of Significant Accounting Policies: Earnings Per Share, Policy: Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Details	'	'
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements	761,000	1,261,000
Incremental Common Shares Attributable to Dilutive Effect of Conversion of Preferred Stock	4,123,750	4,350,000
Incremental Common Shares Attributable to Dilutive Effect of Conversion of Debt Securities	625,000	625,000
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	5,509,750	6,236,000

Note_2_Loans_Held_For_Sale_Sch2

Note 2 - Loans Held For Sale: Schedule of Other Assets (Details) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Details	'	'
Loans and Leases Receivable, Gross, Other	$324,741	$361,779
Loans Receivable, Gross, Commercial, Financial and Agricultural	10,338	61,669
Loans Receivable, Gross, Commercial and Industrial	277,343	600,579
Other Assets Held-for-sale	150,000	'
Disposal Group, Including Discontinued Operation, Loans Receivable, Net	$762,422	$1,024,027

Note_2_Loans_Held_For_Sale_Sch3

Note 2 - Loans Held For Sale: Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Details) (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Details	'	'
Fair Value Assets And Liabilities Measured On Recurring Basis Gain Loss Included In Earnings beginning balance	$1,024,027	$1,279,074
Mortgage Loans on Real Estate, New Mortgage Loans	150,000	378,857
Debt Instrument, Periodic Payment, Principal	-18,794	-38,980
Proceeds from Sale of Loans Held-for-sale	-70,291	-52,221
Gain (Loss) on Sale of Loans and Leases	-3,616	'
Proceeds from Collection of Mortgage Loans Held-for-sale	-397,641	'
Gain (Loss) on Sale of Mortgage Loans	166,300	'
Loans held for sale converted to REO or rental property	-86,717	-39,127
Contract converted to long term investment	'	-353,857
Foreclosed Real Estate Expense	-846	19,863
Fair Value, Assets and Liabilities Measured on Recurring Basis, Gain (Loss) Included in Earnings, Total	$762,422	$1,193,609

Note_3_Real_Estate_Owned_Real_1

Note 3- Real Estate Owned: Real Estate Owned, Disclosure of Detailed Components (Details) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Details	'	'
ResidentialREO	'	$12,764
LandREO	103,222	379,857
CommercialREO	4,010	264
Property Subject to or Available for Operating Lease, Net	$107,232	$392,885

Note_3_Real_Estate_Owned_Chang1

Note 3- Real Estate Owned: Change in balance sheet carrying values for real estate owned (Details) (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Details	'	'
SEC Schedule III, Real Estate, Gross, Beginning Balance	$392,885	$450,877
Proceeds from Sale of Wholly Owned Real Estate and Real Estate Acquired in Settlement of Loans	3,125	39,127
Long Lived Assets Held-for-sale, Proceeds from Sale	-11,241	'
Gains (Losses) on Sales of Other Real Estate	2,511	'
Real Estate Owned, Valuation Allowance, Period Increase (Decrease)	-281,576	'
NetChangeInHoldingCosts	1,528	24,831
SEC Schedule III, Real Estate, Gross, Total	$107,232	$514,835

Note_3_Real_Estate_Owned_Detai

Note 3- Real Estate Owned (Details) (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Details	'	'
Proceeds from Sale of Real Estate	$11,241	'
Proceeds from Sale of Wholly Owned Real Estate and Real Estate Acquired in Settlement of Loans	3,125	39,127
Real Estate Owned, Valuation Allowance, Period Increase (Decrease)	($281,576)	'

Note_4_Other_Assets_Details

Note 4 - Other Assets (Details)	6 Months Ended
	Jun. 30, 2014
Details	'
Investments and Other Noncurrent Assets	'Long term investments: Flyback Energy, Inc.: On November 23, 2010, the Company closed the purchase of an equity interest in Flyback Energy, Inc., for $1,200,000. The purchase was for 2,666,667 share of Series “B” Preferred Stock from Flyback Energy, Inc., a closely held Washington corporation payable on an installment basis. On April 25, 2011, the Company purchased 85,274 shares of Series “C” Preferred Stock for $50,000 which is convertible at $.60 per share and bears a 5% dividend rate. The Flyback Series 'B' Preferred shares are convertible into Flyback common shares on a one for one (1:1) basis and the conversion pricing is subject to adjustments for certain diluting issues of common stock, subdivisions or combinations of common stock, reclassifications, exchanges and/or substitutions of stock. The Company is due 421,480 shares of common stock because of the dilution provision. Flyback Energy, Inc. is a privately-held company that has developed a unique and proprietary electronic switch design that offers control over electrical power and magnetic fields.
Marketable Securities	'Investments in Available for Sale Securities: Ambient Water Corporation (Formerly AWG International Water Corp.): The Company purchased 109,906 shares of the AWG International Water Corp, a Nevada corporation, (“AWGI”) common stock for $500,000 ($250,000 each in 2010 and 2011). In July 2012, AWGI was acquired by MIP Solutions, Inc. in a share exchange transaction (the 'Acquisition'). In connection with this Acquisition, the Company’s 109,906 shares of AWGI common stock were converted into 7,380,433 shares of AWG International Water Corp (formerly MIP Solutions, Inc.) At June 30, 2014 the quoted market value of AWGI was $0.02 per share or $147,609 resulting in an unrealized loss of $73,804 and $369,022, respectively, for the three and six months periods ended June 30, 2014. Total unrealized gain at June 30, 2014 is $352,391. The investment is measured using Level 1 fair value inputs. Gambit Energy Inc.: On February 4, 2013, the Company received 10,000 restricted common shares of Gambit Energy, Inc., a Nevada corporation ('GMEI') quoted on the OTC Markets. The shares were issued as additional consideration for extending the due date of a loan held for sale relating to GMEI promissory note. On the date of the transaction, the fair value of GMEI shares was $10,000 which was recognized as loan fee income in 2013. At June 30, 2014, the quoted market value of the GMEI shares was $.30 per share or $3,000 resulting in an unrealized loss of $100 and $6,200, respectively, for the three and six month periods ended June 30, 2014. Total unrealized loss at June 30, 2014 is $7,000. The investment was measured using Level 1 fair value inputs.
Investment Holdings, Other than Securities	'Investments in Real Estate Limited Liability Companies: At the end of 2012, the Company acquired investments in two Washington state real estate limited liability companies. In 2013, the Company contributed its investment in one real estate owned property with a basis of $51,600 to a newly form limited liability company in exchange for a 12.9% interest in the new company. At June 30, 2014 and 2013, these companies had a carrying value of $481,683 and $428,280, respectively. Some of the investments is accounted for using the equity method. During the three months ended June 30, 2014 and 2013, the Company recorded a loss of $12,155 and $28,184, respectively, and the six months ended June 30, 2014 and 2013, the Company recorded a loss of $25,855 and $28,184, respectively which represents its portion of this real estate company’s loss for the same period. During the three months ended June 30, 2014 and 2013, the Company advanced $26,905 and $53,809 for property taxes and interest owing.
Rental properties	'Rental Properties: At the end of 2013, the Company foreclosed on a loan held for sale in Lebanon, Oregon through the bankruptcy courts, the property is currently being operated as Duffy’s Bar. The bar was subsequently leased on a three (3) year lease agreement for $1500 per month, with the tenant paying all utilities, property taxes and insurance. During the three and six months ended June 30, 2014 the company recognized $4,500 and $9,000 in rental income. This is a commercial building being depreciated over thirty-nine (39) years, the company recorded depreciation of $1,518 for the six month ended June 30, 2014 and will accrued at $179 per month.
Leases of Lessee Disclosure	'Real Estate Leasehold Interest: On May 31, 2013, the Company completed the acquisition of a real property leasehold interest in approximately 63 acres located in Dunn County, North Dakota, (the 'Halliday Project'). The leasehold was acquired by assignment of a lease between Mr. Clint L. Lohman (“Lohman”), Lessee and the Lessors. The Halliday Project, as presently developed, consist of fifty (50) developed residential lots and undeveloped land. Mr. Lohman was elected as a director of GFI at the October 22, 2013 annual shareholder meeting. Lohman initially acquired the property in September 2012 and commenced development of fifty (50) RV/residential lots. Lohman invested $353,857 into the project. The Company loaned Lohman an additional $353,857 which was used for project development. The development is currently approved for a total of 100 lots in the city of Halliday, North Dakota. In 2013, the Company acquired Lohman's interest in the Halliday Project in a share exchange transaction. GFI issued 589,762 common shares valued at $0.45 per share for a value of $265,393. The Company also cancelled Lohman’s outstanding loan balance of $353,857 at the time of the share exchange. Total consideration for the leasehold interest was $619,250. The Company owns the Halliday Project leasehold interest and intends to complete the development of the additional 50 lots at an estimated cost of $300,000. The Company may place recreational vehicles, mobile homes, or construct cabins on the lots and offer them for rent or lease. At the three and six months ended June 30, 2014, the Company had five and seven lots leased and had rental income of $7,240 and $17,280. The lease consists of approximately 63 acres in the city of Halliday, North Dakota. The lease term is fifteen (15) years and commenced on September 15, 2012. The Company has an option to renew the lease for an additional 15 year term. The monthly rent on the lease is Fifty ($50.00) Dollars for each occupied and rented trailer, cabin or lot. The Company is obligated to pay any and all real and personal property taxes, general taxes, special assessments and other charges levied against the property and its improvements. During the lease term, the Company will own title to all of the improvements and personal property. At the expiration of the lease or termination, all improvements and personal property located on the premises will revert to the Lessors.

Note_5_Lines_of_Credit_Details

Note 5 - Lines of Credit (Details) (USD $)	6 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Details	'	'
Long-term Line of Credit	$0	'
Line of Credit Facility, Collateral Fees, Amount	1,250	'
Line of credit, affiliated company	$1,310,000	$1,415,000

Note_7_Series_B_Preferred_Stoc1

Note 7 - Series "B" Preferred Stock (Details)	Jun. 30, 2014	Dec. 31, 2013
Details	'	'
Preferred Stock, Shares Outstanding	1,649,500	1,649,500

Note_8_Relatedparty_Transactio1

Note 8- Related-party Transactions (Details)	6 Months Ended
	Jun. 30, 2014
Details	'
Description of related parties	'Related parties are defined as Officers, Directors, and/or those Shareholders owning or controlling more than 5% of the common stock of GFI, or any entities that are owned or controlled by Officers, Directors, and/or those Shareholders owning or controlling more than 5% of the common stock of GFI.
Related parties and relationships	'Coghlan Family Corporation, Coghlan, LLC and West 3773 Fifth, LLC are controlled by John R. Coghlan, a Company director, CFO and majority shareholder. Coghlan Family Corporation is owned 100% by Coghlan, LLC, which is owned by the Coghlan family members. John R. and Wendy Coghlan (husband and wife) collectively own 35.65% of Coghlan, LLC and are co-managers. West 3773 Fifth, LLC is owned 100% by John and Wendy Coghlan (husband and wife). Genesis Financial Corporation is a company which is owned 100% by Michael Kirk, who is a director and officer of Genesis Financial, Inc. Genesis Financial, Inc. provides accounting, office services and supplies, and office space for his services provided to Genesis Financial Corporation. The services are valued at $1,500 per month. Michael Lavigne is an officer and director of Placer Creek Mining Company. Mr. Lavigne is a director of Genesis Financial, Inc.
Related Party Transactions During the Period	'John R. Coghlan One June 14, 2013 and June 30, 2014 John R Coghlan personally guaranteed our Riverbank line of credit. On April 30, 2014, John R Coghlan exercise his option for 250,000 share of common stock at $0.20 per share or $50,000. Coghlan Family Corporation “CFC” On June 24, 2013, Coghlan Family Corporation purchased $52,221 interest in two loans held for sale by the Company. No gain or loss was recognized on this sale because they were sold at its carrying value. There was no activity for the quarter ending June 30, 2014. Coghlan, LLC There was no activity for the years ending December 31, 2013 and for the quarter ended June 30, 2014. West 3773 Fifth, LLC As of June 30, 2014, the Company continued a month-to-month tenancy with 3773 West Fifth, LLC, a company owned and controlled by John and Wendy Coghlan. The monthly rent is $1,250. Genesis Finance Corporation “GFC” There was no activity for the year ending December 31, 2013. On January 31, 2014, GFC purchased $73,907 interest in five loans held for sale by the Company. The Company recognized a loss of $3,616 for the purchase. Michael Lavigne There was no activity for the year ending December 31, 2013. During the first quarter 2014, the Company loaned Placer Creek Mining Company $150,000.