Genesis Financial 10-Q 25 Jul 16 2016 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Jul. 19, 2016
Document and Entity Information
Entity Registrant Name	Genesis Financial Inc
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Amendment Flag	false
Entity Central Index Key	1,183,082
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		17,023,870
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	2,016
Document Fiscal Period Focus	Q2
Trading Symbol	gfnl

GENESIS FINANCIAL, INC. Condens

GENESIS FINANCIAL, INC. Condensed Balance Sheets (Interim period unaudited) - USD ($)		Jun. 30, 2016	Dec. 31, 2015
CURRENT ASSETS:
Cash and cash equivalents		$ 25,322	$ 31,301
Interest and other receivables		68,583	70,909
Investments in real estate limited liability companies		100,889	270,303
Loans held for sale		331,612	503,890
Real estate owned		84,677	27,451
Total current assets		611,083	903,854
NON-CURRENT ASSETS:
Long-term investments		362,619	362,619
Investments - available for sale			26,570
Real estate leasehold interest, net of accumulated amortization of $60,206 and $49,885, respectively		214,744	225,065
Rental property, net of accumulated depreciation of $5,805 and $4,733, respectively		78,657	79,729
Office equipment, net of accumulated depreciation of $6,587 and $5,905, respectively		1,345	2,027
Total non-current assets		657,365	696,010
Total assets		1,268,448	1,599,864
CURRENT LIABILITIES:
Line of credit, related party		950,000	1,260,000
Line of credit, bank			170,000
Note payable		32,335	30,034
Other current liabilities		1,847	13,040
Total current liabilities		984,182	1,473,074
LONG-TERM LIABILITIES:
Convertible note payable to officer			250,000
COMMITMENT AND CONTINGENCIES	[1]	0	0
STOCKHOLDERS' EQUITY:
Series B Preferred stock, $1.00 par value; 2,290,000 authorized, none issued and outstanding, respectively		0	0
Common stock, $.001 par value; 100,000,000 authorized, 17,023,870 and 16,198,870 issued and outstanding, respectively		17,024	16,199
Additional paid-in capital		8,557,312	8,264,137
Accumulated deficit		(8,290,070)	(7,930,116)
Accumulated other comprehensive income (loss)			(473,430)
Total stockholders' equity (deficit)		284,266	(123,210)
Total liabilities and stockholders' equity		$ 1,268,448	$ 1,599,864
[1]	Note 6

Statement of Financial Position

Statement of Financial Position - Parenthetical - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Statement of financial position
Preferred Stock, Par Value	$ 1	$ 1
Preferred Stock, Shares Authorized	2,290,000	2,290,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Common Stock, Par Value	$ 0.001	$ 0.001
Common Stock, Shares Authorized	100,000,000	100,000,000
Common Stock, Shares Issued	17,023,870	16,198,870
Common Stock, Shares Outstanding	17,023,870	16,198,870
Accumulated depreciation, equipment	$ 6,587	$ 5,905
Accumulated amortization, real estate leasehold interest	60,206	49,885
Accumulated depreciation, rental property	$ 5,805	$ 4,733

GENESIS FINANCIAL, INC. Conden4

GENESIS FINANCIAL, INC. Condensed Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
REVENUE:
Interest, processing fees and other income	$ 3,323	$ 15,731	$ 22,853	$ 34,945
Rental income	5,028	26,450	10,528	42,950
Total revenues	8,351	42,181	33,381	77,895
EXPENSES:
Loss (income) on investment in real estate LLC	(131,625)	1,950	(269,735)	1,902
Realized loss on sale of available for sale security	497,787		497,787
(Gain) on sale of loan			(21,258)
Salaries	12,750	12,750	25,500	25,500
Interest expense, related party		5,041	2,155	10,082
Interest expense, other	833	2,372	2,369	4,247
Financing expense, related party			29,000
Depreciation	877	877	1,754	1,754
Amortization	5,160	5,160	10,321	10,321
Office occupancy and other	66,532	64,366	115,442	107,010
Total operating (income) expenses	452,314	92,516	393,335	160,816
NET LOSS	(443,963)	(50,335)	(359,954)	(82,921)
COMPREHENSIVE INCOME (LOSS):
Unrealized income (loss) on available for sale securities	(11,072)	73,804	(24,357)	(73,804)
Reclassification of unrealized loss on available for sale security sold	497,787		497,787
Total other comprehensive income (loss).	486,715	73,804	473,430	(73,804)
COMPREHENSIVE INCOME (LOSS)	$ 42,752	$ 23,469	$ 113,476	$ (156,725)
BASIC AND DILUTED (LOSS) PER SHARE	$ (0.03)	$ 0	$ (0.02)	$ (0.01)
WEIGHTED AVERAGE SHARES: BASIC AND DILUTED	17,010,683	12,820,779	16,811,919	12,451,529

GENESIS FINANCIAL, INC. Conden5

GENESIS FINANCIAL, INC. Condensed Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Statement of cash flows
CASH FLOWS FROM OPERATING ACTIVITIES	$ (230,427)	$ (68,895)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of real estate limited liability company	389,934	(22,039)
Proceeds from sale of investment available for sale	2,213
Net cash provided (used) by investing activities	392,147	(22,039)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings (repayment) line of credit with related party, net		(20,000)
Borrowings (repayment) from line of credit from bank, net	(170,000)	130,000
Borrowings (repayment) of note payable	2,301	(3,266)
Net cash provided (used) by financing activities	(167,699)	106,734
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(5,979)	15,800
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	31,301	64,493
CASH AND CASH EQUIVALENTS AT END OF PERIOD	25,322	80,293
NONCASH TRANSACTIONS
Preferred stock converted to common stock		1,649,500
Convertible note payable to officer converted to common stock	250,000
Convertible note receivable settled with long-term investment		$ 150,000
Loans held for sale converted to REO or rental property	63,117
Investment in real estate limited liability company exchanged for reduction of line of credit with related party	300,000
Loan held for sale exchanged for reduction in line of credit with related party	$ 10,000

Note 1 - Organization and Summa

Note 1 - Organization and Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2016
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 and on January 26, 2016 we moved our corporate domicile to the State of Wyoming. The Company is primarily engaged in the business of purchasing and selling real estate receivable loans 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 a related party. Summary of Significant Accounting Policies: Use of estimates Fair value measurements - 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 5. 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. Real estate leasehold interest – Loans held for sale – Real estate owned – Income tax Earnings per share 2016 2015 Stock options 261,000 261,000 Convertible debt - 625,000 Total possible dilution 261,000 886,000 Reclassifications

Note 2 - Loans Held For Sale

Note 2 - Loans Held For Sale	6 Months Ended
	Jun. 30, 2016
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, 2016 December 31, 2015 Residential $ 147,446 $ 253,853 Commercial 184,166 240,037 Other - 10,000 Loans held for sale - Total $ 331,612 $ 503,890 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, 2016 and 2015: June 30, 2016 2015 Beginning Balance $ 503,890 $ 611,400 New loans - 15,000 Principal payments received (6,464) (3,339) Proceeds on sale of loans (120,000) - Gain on sale of loans 21,258 - Converted to REO (63,117) - Exchanged for reduction in line of credit, related party (10,000) - Repossession expenses 6,045 2,091 Ending Balance $ 331,612 $ 625,152 During the six months ended June 30, 2016, the Company sold two loans with a basis of $103,742 for $125,000. The Company also exchanged one loan with a basis of $10,000 to a related party to reduce the line of credit by $10,000.

Note 3- Real Estate Owned

Note 3- Real Estate Owned	6 Months Ended
	Jun. 30, 2016
Notes
Note 3- Real Estate Owned:	NOTE 3- REAL ESTATE OWNED: The Company's fair value of REO consisted of the following: June 30, 2016 December 31, 2015 Land $ 23,441 $ 23,441 Commercial 61,236 4,010 Total $ 84,677 $ 27,451 The following table presents the change in balance sheet carrying values associated with REO for the six months ended June 30, 2016 and 2015: June 30, 2016 2015 Beginning Balance $ 27,451 $ 44,392 REO converted from loans held for sale 63,117 - Net change in holding costs (5,891) - Ending Balance $ 84,677 $ 44,392

Note 4 - Other Assets

Note 4 - Other Assets	6 Months Ended
	Jun. 30, 2016
Notes
Note 4 - Other Assets	NOTE 4 — OTHER ASSETS: Long term investments: Flyback Energy, Inc.: In December 2015, the Company reduced the carrying value of its Flyback Energy common shares to $0.067 per share, or $212,619, and recorded an impairment change of $1,037,381 based on the last known common share sale. Flyback Energy, Inc. is still a development stage company being financed by outside sources of capital. At this time, Flyback is not assured of future financing capital and is subject to changing world conditions. Digi Outdoor Media, Inc.: In 2014, the Company loaned Placer Creek Mining Company (“Placer”) $150,000. The loan bore interest at a rate of 5.0% and the Company had an option to convert any or all of the amount due into an equity private placement of Placer. The Placer transaction is treated as a related party transaction. (see Note 8:Michael Lavigne) On February, 24, 2015, the Company converted the note into 300,000 shares of common stock of Digi Outdoor Media, Inc. (“Digi”), the successor in interest to Placer. The Company determined that the fair value of the shares received on the conversion to be $150,000 based upon the note receivable balance of $150,000 because Digi is not publicly traded and has had no recent cash sale of its common stock. The fair value was determined using Level 2 inputs under the fair value hierarchy. Digi Outdoor Media, Inc. is a startup company in the business of building and leasing outdoor advertising signs. 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 the 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.). On May 19, 2016, by board action the Company sold its interest in Ambient Water Corporation to John R. Coghlan (see Note 8) for $.0003 per share, the fair value of the stock on the day of sale for proceeds of $2,213, resulting in a recognized loss of $497,787. 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 formed limited liability company in exchange for a 12.9% interest in the new company. In 2014, the Company contributed its investment in one real estate owned property with a basis of $47,925 to a newly formed limited liability company in exchange for 31.95% interest in the new company. These companies are 100% controlled and managed by Genesis Finance Corporation and John Coghlan, related parties. (See Note 8) Investments are accounted for using the equity method. During the three months ended June 30, 2016 and 2015, the Company recorded a (income) loss of ($131,625) and $1,950, respectively, and for the six months ended June 30, 2016 and 2015, the Company recorded a (income) loss of ($269,735) and $1,902, respectively. During the six months ended June 30, 2016 and 2015, the Company advanced $2,058 and $22,039 for property taxes and interest owing. During the quarter ended March 31, 2016, one limited liability companies was sold for $399,934, resulting in a gain of $139,821. On May 18, 2016, by board action the Company exchanged its 9.1756% interest in Wenatchee Riverview, LLC to Coghlan Family Corporation “CFC” (see Note 8) for $300,000, resulting in a gain on sale of real estate limited liability company of $131,625. The transaction was made by reducing the balance payable to Coghlan Family Corporation’s revolving line of credit. As required by the operating agreement of Wenatchee, LLC operating agreement the offer was shown to all other members to participate or bid higher for the interest. No members made an offer and the Board of Directors of the Company approved the sale. Rental Properties: At the end of 2013, the Company foreclosed on a loan previously 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 $1,500 per month. During the three and six months ended June 30, 2016 and 2015 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 $536 and $1,072 for the three and six months ended June 30, 2016 and June 30, 2015. Real Estate Leasehold Interest: On May 31, 2013, the Company completed the acquisition of a real property leasehold interest in approximately 63 acres with fifty (50) RV/residential lots located in Dunn County, North Dakota, (the "Halliday Project"). Total consideration for the leasehold interest was $619,250. The Company may place recreational vehicles, mobile homes, or construct cabins on the lots and offer them for rent or lease. In 2015 the Company purchased two travel trailers for $30,000 from JC Housing, LLC, a related party (see Note 8). For the three months ended June 30, 2016 and 2015, the Company recorded amortization of $5,161, respectively and had four and fourteen lots lease with rental income of $528 and $21,950, respectively. For the six months ended June 30, 2016 and 2015, the Company recorded amortization of $10,321, respectively and had four and seventeen lots leased and had rental income of $1,528 and $39,950, respectively. The lease consists of approximately 63 acres in the city of Halliday, North Dakota. The lease term is fifteen years and commenced on September 15, 2012. The Company has an option to renew the lease for an additional fifteen 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. At December 31, 2015, the Company decided to adjust the carrying value of the property to a fair value estimated of $195,065 (not including travel trailers), based on management’s estimate of discounted cash flows received from the property.

Note 5 - Lines of Credit

Note 5 - Lines of Credit	6 Months Ended
	Jun. 30, 2016
Notes
Note 5 - Lines of Credit:	NOTE 5 — LINES OF CREDIT: GFI has a $250,000 line of credit with Riverbank. At June 30, 2016 and December 31, 2015 the balance owing is $0 and $170,000. 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 9, 2016 the line of credit was extended to October 1, 2016 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. At June 30, 2016 and December 31, 2015 the balance owing was $950,000 and $1,260,000. 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 requires 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 agreed to waive the interest and origination fees starting October 1, 2010 and also agreed to waive the 3.0 debt to equity ratio requirement as well as the 12% default rate. This waiver agreement is still in effect at June 30, 2016. (See 8-K filed February 8, 2016) The Company by board action exchanged a loan held for sale with a basis of $10,000 and exchanged its 9.1756% interest in a limited liability company valued at $300,000 for a reduction in the line of credit of $310,000.

Note 6 - Notes Payable

Note 6 - Notes Payable	6 Months Ended
	Jun. 30, 2016
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 the Company's agreement to issue 290,000 shares of the Company’s Series “B” Preferred stock. These collateral shares have not been issued. On October 16, 2012, the Company and Coghlan agreed to extend the due date of the note to December 15, 2016. On February 8, 2016, Mr. Coghlan elected to convert his note into shares of the Company’s common stock. The note was originally convertible into 250,000 shares of Series "B", or 625,000 shares of common stock equivalents, at the option of Mr. Coghlan. However, Mr. Coghlan agreed to accept 725,000 common shares in lieu of full payment. The 100,000 additional common shares represents a financing cost to the Company and as such, financing expense of $29,000 was recognized in the quarter ended March 31, 2016.

Note 7 - Series B Preferred Sto

Note 7 - Series B Preferred Stock	6 Months Ended
	Jun. 30, 2016
Notes
Note 7 - Series B Preferred Stock	NOTE 7 — SERIES B PREFERRED STOCK On May 18, 2015, the Company by majority consent of Preferred Shareholder agreed to convert all of the outstanding shares of Series B Preferred to common stock. On June 26, 2015, 1,649,500 shares of Series B Preferred were converted into 4,123,750 common shares. As of June 30, 2016 and December 31, 2015, no shares of Series B Preferred Stock are issued, outstanding or obligated.

Note 8- Related-party Transacti

Note 8- Related-party Transactions	6 Months Ended
	Jun. 30, 2016
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). JC Housing, LLC is owned 33.33% by John R. Coghlan and 33.33% by Clint Lohman. Mr. Lohman is a director of GFI. Genesis Financial Corporation is a company which is owned 100% by Michael Kirk, who is a director and officer of GFI. GFI 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. Genesis Finance Corporation and John R. Coghlan has managing agreement with the real estate limited liability companies. Michael Lavigne is an officer and director of Placer Creek Mining Company. Mr. Lavigne is a director of GFI. In addition to transactions described in Notes 2, 3, 4, 5 and 6, the Company had the following related party transactions for the quarter and six months ended June 30, 2016 and year ended December 31, 2015. John R. Coghlan On June 9, 2016 John R Coghlan personally guaranteed our Riverbank line of credit. On May 19, 2016, by board action the Company sold 7,380,433 common shares of Ambient Water Corporation for $2,213 or $0.0003 per share the fair value on that date to John R Coghlan. As of March 31, 2016, the Company continues a managing agreement for the investment in real estate limited liability companies. The agreement is stated in the operating agreement of each limited liability companies. On February 8, 2016, John R. Coghlan converted his $250,000 note for 725,000 shares of common stock. The note was originally convertible into 250,000 shares of Series "B", or 625,000 shares of common stock equivalents, at the option of Mr. Coghlan. However, Mr. Coghlan agreed to accept 725,000 common shares in lieu of full payment. The 100,000 additional common shares represents a financing cost to the Company and as such, financing expense of $29,000 was recognized in the quarter ended March 31, 2016. Coghlan Family Corporation “CFC” On May 18, 2016, by board action the Company exchanged its 9.1756% interest in Wenatchee Riverview, LLC to CFC for a $300,000 reduction in the line of credit with CFC, a gain of $131,625 was realized. On May 19, 2016, by board action the Company exchanged a loan held for sale for a $10,000 reduction in the line of credit with CFC. In February 2016, Coghlan Family Corporation amended the Warehouse Line of Credit. (See Note 5) There was no activity for the year ended December 31, 2015. Coghlan, LLC There was no activity for the years ended December 31, 2015 and for the six month ended June 30, 2016. JC Housing, LLC For the year ended December 31, 2015, the Company purchased two travel trailers from JC Housing, LLC for $30,000. West 3773 Fifth, LLC As of June 30, 2016, 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” As of June 30, 2016, the Company continues a managing agreement for the investment in real estate limited liability companies. The agreement is stated in the operating agreement of each limited liability company. Michael Lavigne, Director There was no activity for the six month ended June 30, 2016. For the year ended December 31, 2015, the Company converted the Placer Creek Mining Company loan of $150,000 to 300,000 shares of Digi Outdoor Media, Inc., the successor to Placer Creek Mining Company. (See Note 4) Clint Lohman, Director There was no activity for the six months ended June 30, 2016.

Note 1 - Organization and Sum14

Note 1 - Organization and Summary of Significant Accounting Policies: Use of Estimates (Policies)	6 Months Ended
	Jun. 30, 2016
Policies
Use of Estimates	Use of estimates

Note 1 - Organization and Sum15

Note 1 - Organization and Summary of Significant Accounting Policies: Fair Value Measurements (Policies)	6 Months Ended
	Jun. 30, 2016
Policies
Fair Value Measurements	Fair value measurements - 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 5. 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. Real estate leasehold interest –

Note 1 - Organization and Sum16

Note 1 - Organization and Summary of Significant Accounting Policies: Loans held for sale (Policies)	6 Months Ended
	Jun. 30, 2016
Policies
Loans held for sale	Loans held for sale –

Note 1 - Organization and Sum17

Note 1 - Organization and Summary of Significant Accounting Policies: Real estate owned (Policies)	6 Months Ended
	Jun. 30, 2016
Policies
Real estate owned	Real estate owned –

Note 1 - Organization and Sum18

Note 1 - Organization and Summary of Significant Accounting Policies: Income tax (Policies)	6 Months Ended
	Jun. 30, 2016
Policies
Income tax	Income tax

Note 1 - Organization and Sum19

Note 1 - Organization and Summary of Significant Accounting Policies: Earnings Per Share, Policy (Policies)	6 Months Ended
	Jun. 30, 2016
Policies
Earnings Per Share, Policy	Earnings per share 2016 2015 Stock options 261,000 261,000 Convertible debt - 625,000 Total possible dilution 261,000 886,000

Note 1 - Organization and Sum20

Note 1 - Organization and Summary of Significant Accounting Policies: Reclassifications (Policies)	6 Months Ended
	Jun. 30, 2016
Policies
Reclassifications	Reclassifications

Note 1 - Organization and Sum21

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, 2016
Tables/Schedules
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share	2016 2015 Stock options 261,000 261,000 Convertible debt - 625,000 Total possible dilution 261,000 886,000

Note 2 - Loans Held For Sale_ S

Note 2 - Loans Held For Sale: Schedule of Other Assets (Tables)	6 Months Ended
	Jun. 30, 2016
Tables/Schedules
Schedule of Other Assets	June 30, 2016 December 31, 2015 Residential $ 147,446 $ 253,853 Commercial 184,166 240,037 Other - 10,000 Loans held for sale - Total $ 331,612 $ 503,890

Note 2 - Loans Held For Sale_23

Note 2 - Loans Held For Sale: Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Tables)	6 Months Ended
	Jun. 30, 2016
Tables/Schedules
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis	June 30, 2016 2015 Beginning Balance $ 503,890 $ 611,400 New loans - 15,000 Principal payments received (6,464) (3,339) Proceeds on sale of loans (120,000) - Gain on sale of loans 21,258 - Converted to REO (63,117) - Exchanged for reduction in line of credit, related party (10,000) - Repossession expenses 6,045 2,091 Ending Balance $ 331,612 $ 625,152

Note 3- Real Estate Owned_ Real

Note 3- Real Estate Owned: Real Estate Owned, Disclosure of Detailed Components (Tables)	6 Months Ended
	Jun. 30, 2016
Tables/Schedules
Real Estate Owned, Disclosure of Detailed Components	June 30, 2016 December 31, 2015 Land $ 23,441 $ 23,441 Commercial 61,236 4,010 Total $ 84,677 $ 27,451

Note 1 - Organization and Sum25

Note 1 - Organization and Summary of Significant Accounting Policies (Details)	6 Months Ended
	Jun. 30, 2016
Details
Nature of Operations	Organization: Genesis Financial, Inc. (“the Company” or “GFI”) was incorporated in Washington State on January 24, 2002 and on January 26, 2016 we moved our corporate domicile to the State of Wyoming. The Company is primarily engaged in the business of purchasing and selling real estate receivable loans 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 a related party.

Note 1 - Organization and Sum26

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) - shares	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Details
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements	261,000	261,000
Incremental Common Shares Attributable to Dilutive Effect of Conversion of Debt Securities		625,000
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	261,000	886,000

Note 2 - Loans Held For Sale_27

Note 2 - Loans Held For Sale: Schedule of Other Assets (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Details
Loans and Leases Receivable, Gross, Consumer, Real Estate	$ 147,446	$ 253,853
Loans and Leases Receivable, non-consumer	184,166	240,037
Loans and Leases Receivable, Related Parties		10,000
Loans held for sale	$ 331,612	$ 503,890

Note 2 - Loans Held For Sale_28

Note 2 - Loans Held For Sale: Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Details) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Details
Fair Value Assets Liabilities Measured On Recurring Basis Beginning Balance	$ 503,890	$ 611,400
Debt Instrument, Periodic Payment, Principal	(6,464)	(3,339)
Proceeds from Sales of Assets, Investing Activities	(120,000)
(Gain) on sale of loan	21,258
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers out of Level 3	(63,117)
Loan held for sale exchanged for reduction in line of credit with related party	(10,000)
Foreclosed Real Estate Expense	6,045	2,091
Fair Value, Assets and Liabilities Measured on Recurring Basis, Gain (Loss) Included in Earnings	$ 331,612	$ 625,152

Note 2 - Loans Held For Sale (D

Note 2 - Loans Held For Sale (Details)	6 Months Ended
	Jun. 30, 2016USD ($)
Details
Mortgage Loans on Real Estate, Federal Income Tax Basis	$ 103,742
Proceeds from Sale of Loans Held-for-sale	125,000
Loan held for sale exchanged for reduction in line of credit with related party	10,000
Line of Credit Facility, Increase (Decrease), Other, Net	$ 10,000

Note 3- Real Estate Owned_ Re30

Note 3- Real Estate Owned: Real Estate Owned, Disclosure of Detailed Components (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015	Dec. 31, 2014
Details
Land	$ 23,441	$ 23,441
Commercial	61,236	4,010
Real estate owned	$ 84,677	$ 27,451	$ 44,392	$ 44,392

Note 3- Real Estate Owned (Deta

Note 3- Real Estate Owned (Details) - USD ($)	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015	Dec. 31, 2014
Details
Property Subject to or Available for Operating Lease, Net	$ 84,677	$ 27,451	$ 44,392	$ 44,392
Real Estate Owned, Valuation Allowance, Valuation Increase	63,117
Real Estate Owned, Valuation Allowance, Period Increase (Decrease)	$ (5,891)

Note 4 - Other Assets (Details)

Note 4 - Other Assets (Details) - USD ($)	Jun. 26, 2015	Feb. 24, 2015	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Conversion of Stock, Shares Converted	1,649,500
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 the 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.). On May 19, 2016, by board action the Company sold its interest in Ambient Water Corporation to John R. Coghlan (see Note 8) for $.0003 per share, the fair value of the stock on the day of sale for proceeds of $2,213, resulting in a recognized loss of $497,787.
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 formed limited liability company in exchange for a 12.9% interest in the new company. In 2014, the Company contributed its investment in one real estate owned property with a basis of $47,925 to a newly formed limited liability company in exchange for 31.95% interest in the new company. These companies are 100% controlled and managed by Genesis Finance Corporation and John Coghlan, related parties. (See Note 8) Investments are accounted for using the equity method. During the three months ended June 30, 2016 and 2015, the Company recorded a (income) loss of ($131,625) and $1,950, respectively, and for the six months ended June 30, 2016 and 2015, the Company recorded a (income) loss of ($269,735) and $1,902, respectively. During the six months ended June 30, 2016 and 2015, the Company advanced $2,058 and $22,039 for property taxes and interest owing. During the quarter ended March 31, 2016, one limited liability companies was sold for $399,934, resulting in a gain of $139,821. On May 18, 2016, by board action the Company exchanged its 9.1756% interest in Wenatchee Riverview, LLC to Coghlan Family Corporation “CFC” (see Note 8) for $300,000, resulting in a gain on sale of real estate limited liability company of $131,625. The transaction was made by reducing the balance payable to Coghlan Family Corporation’s revolving line of credit. As required by the operating agreement of Wenatchee, LLC operating agreement the offer was shown to all other members to participate or bid higher for the interest. No members made an offer and the Board of Directors of the Company approved the sale.
Operating Leases of Lessor Disclosure					Rental Properties: At the end of 2013, the Company foreclosed on a loan previously 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 $1,500 per month. During the three and six months ended June 30, 2016 and 2015 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 $536 and $1,072 for the three and six months ended June 30, 2016 and June 30, 2015.
Other Recurring Income			$ 4,500		$ 9,000
Other Depreciation and Amortization			536		$ 1,072
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 with fifty (50) RV/residential lots located in Dunn County, North Dakota, (the "Halliday Project"). Total consideration for the leasehold interest was $619,250. The Company may place recreational vehicles, mobile homes, or construct cabins on the lots and offer them for rent or lease. In 2015 the Company purchased two travel trailers for $30,000 from JC Housing, LLC, a related party (see Note 8). For the three months ended June 30, 2016 and 2015, the Company recorded amortization of $5,161, respectively and had four and fourteen lots lease with rental income of $528 and $21,950, respectively. For the six months ended June 30, 2016 and 2015, the Company recorded amortization of $10,321, respectively and had four and seventeen lots leased and had rental income of $1,528 and $39,950, respectively. The lease consists of approximately 63 acres in the city of Halliday, North Dakota. The lease term is fifteen years and commenced on September 15, 2012. The Company has an option to renew the lease for an additional fifteen 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. At December 31, 2015, the Company decided to adjust the carrying value of the property to a fair value estimated of $195,065 (not including travel trailers), based on management’s estimate of discounted cash flows received from the property.
Amortization of Leased Asset			5,161		$ 10,321
Capital Leases, Income Statement, Lease Revenue			528	$ 21,950	$ 1,528	$ 39,950
Equity Method Investment Flyback Energy Inc.
Equity Method Investments and Joint Ventures Disclosure					Flyback Energy, Inc.: In December 2015, the Company reduced the carrying value of its Flyback Energy common shares to $0.067 per share, or $212,619, and recorded an impairment change of $1,037,381 based on the last known common share sale. Flyback Energy, Inc. is still a development stage company being financed by outside sources of capital. At this time, Flyback is not assured of future financing capital and is subject to changing world conditions.
Equity Method Investment Digi Outdoor Media, Inc.
Equity Method Investments and Joint Ventures Disclosure					Digi Outdoor Media, Inc.: In 2014, the Company loaned Placer Creek Mining Company (“Placer”) $150,000. The loan bore interest at a rate of 5.0% and the Company had an option to convert any or all of the amount due into an equity private placement of Placer. The Placer transaction is treated as a related party transaction. (see Note 8:Michael Lavigne) On February, 24, 2015, the Company converted the note into 300,000 shares of common stock of Digi Outdoor Media, Inc. (“Digi”), the successor in interest to Placer. The Company determined that the fair value of the shares received on the conversion to be $150,000 based upon the note receivable balance of $150,000 because Digi is not publicly traded and has had no recent cash sale of its common stock. The fair value was determined using Level 2 inputs under the fair value hierarchy. Digi Outdoor Media, Inc. is a startup company in the business of building and leasing outdoor advertising signs.
Loans Receivable, Net			$ 150,000		$ 150,000
Conversion of Stock, Shares Converted		300,000
Fair value shares received in transaction		$ 150,000

Note 5 - Lines of Credit (Detai

Note 5 - Lines of Credit (Details) - USD ($)	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Details
Line of Credit Facility, Current Borrowing Capacity	$ 250,000
Long-term Line of Credit	$ 0	$ 170,000
Line of Credit Facility, Asset Restrictions	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.
Line of Credit Facility, Maximum Borrowing Capacity	$ 2,500,000
Line of credit, affiliated company	$ 950,000	$ 1,260,000

Note 6 - Notes Payable (Details

Note 6 - Notes Payable (Details) - USD ($)	3 Months Ended	6 Months Ended
	Mar. 31, 2016	Jun. 30, 2016
Details
Debt Instrument, Convertible, Beneficial Conversion Feature		$ 128,750
Payments of Financing Costs	$ 29,000

Note 7 - Series B Preferred S35

Note 7 - Series B Preferred Stock (Details)	Jun. 26, 2015shares
Details
Conversion of Stock, Shares Converted	1,649,500
Convertible Preferred Stock, Shares Issued upon Conversion	4,123,750

Note 8- Related-party Transac36

Note 8- Related-party Transactions (Details)	6 Months Ended
	Jun. 30, 2016
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). JC Housing, LLC is owned 33.33% by John R. Coghlan and 33.33% by Clint Lohman. Mr. Lohman is a director of GFI. Genesis Financial Corporation is a company which is owned 100% by Michael Kirk, who is a director and officer of GFI. GFI 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. Genesis Finance Corporation and John R. Coghlan has managing agreement with the real estate limited liability companies. Michael Lavigne is an officer and director of Placer Creek Mining Company. Mr. Lavigne is a director of GFI.