Genesis Financial 10-Q 4 Nov 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Oct. 17, 2016
Document and Entity Information
Entity Registrant Name	Genesis Financial Inc
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Entity Central Index Key	1,183,082
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		17,135,295
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	Q3
Trading Symbol	gfnl

GENESIS FINANCIAL, INC. Condens

GENESIS FINANCIAL, INC. Condensed Balance Sheets (Interim period unaudited) - USD ($)		Sep. 30, 2016	Dec. 31, 2015
CURRENT ASSETS:
Cash and cash equivalents		$ 15,272	$ 31,301
Interest and other receivables		36,353	70,909
Investments in real estate limited liability companies		96,792	270,303
Loans held for sale		463,520	503,890
Real estate owned		25,391	27,451
Total current assets		637,328	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 $65,367 and $49,885, respectively		209,583	225,065
Rental property, net of accumulated depreciation of $6,341 and $4,733, respectively		123,121	79,729
Office equipment, net of accumulated depreciation of $6,928 and $5,905, respectively		1,004	2,027
Total non-current assets		696,327	696,010
Total assets		1,333,655	1,599,864
CURRENT LIABILITIES:
Line of credit, related party		950,000	1,260,000
Line of credit, bank		134,714	170,000
Note payable		30,758	30,034
Other current liabilities		953	13,040
Total current liabilities		1,116,425	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, 17,135,295 and 16,198,870 issued and outstanding, respectively		17,135	16,199
Additional paid-in capital		8,589,331	8,264,137
Accumulated deficit		(8,389,236)	(7,930,116)
Accumulated other comprehensive (loss)			(473,430)
Total stockholders' equity		217,230	(123,210)
Total liabilities and stockholders' equity		$ 1,333,655	$ 1,599,864
[1]	Note 6

Statement of Financial Position

Statement of Financial Position - Parenthetical - USD ($)	Sep. 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	17,135,295	16,198,870
Common Stock, Shares Outstanding	17,135,295	16,198,870
Accumulated depreciation, equipment	$ 6,928	$ 5,905
Accumulated amortization, real estate leasehold interest	65,367	49,885
Accumulated depreciation, rental property	$ 6,341	$ 4,733

GENESIS FINANCIAL, INC. Conden4

GENESIS FINANCIAL, INC. Condensed Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
REVENUE:
Interest, processing fees and other income	$ 11,673	$ 13,694	$ 34,526	$ 48,639
Rental income	6,000	20,410	16,528	63,360
Net revenues	17,673	34,104	51,054	111,999
EXPENSES:
Fair value adjustment	44,761	67,893	44,761	67,893
Loss (income) on investment in real estate LLC	4,097	(813)	(265,638)	1,089
Loss on sale of available for sale security			497,787
(Gain) on sale of loan			(21,258)
Salaries	10,250	12,750	35,750	38,250
Interest expense, related party	6,142	5,041	8,297	15,123
Interest expense, other	83	3,269	2,452	7,517
Financing expense, related party			29,000
Depreciation	877	877	2,630	2,630
Amortization	5,161	5,161	15,482	15,482
Rental property expense	2,437	6,232	13,508	27,183
Office occupancy and other	43,032	39,176	147,404	125,236
Total operating expenses	116,839	139,587	510,175	300,403
NET LOSS	(99,166)	(105,482)	(459,120)	(188,403)
COMPREHESIVE INCOME (LOSS):
Unrealized loss on available for sale securities			(24,357)	(73,804)
Reclassification of unrealized loss on available for sale security			497,787
Total other comprehensive income (loss)			473,430	(73,804)
COMPREHESIVE INCOME (LOSS)	$ (96,147)	$ (105,482)	$ 14,310	$ (262,207)
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE	$ (0.01)	$ (0.01)	$ (0.03)	$ (0.01)
WEIGHTED AVERAGE SHARES:BASIC AND DILUTED	17,067,003	16,198,870	16,897,568	14,381,898

GENESIS FINANCIAL, INC. Conden5

GENESIS FINANCIAL, INC. Condensed Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Statement of cash flows
CASH FLOWS FROM OPERATING ACTIVITIES	$ (373,614)	$ (66,933)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in real estate limited liability companies	389,934	(32,039)
Proceeds from sale of investment in available for sale security	2,213
Net cash provided (used) by investing activities	392,147	(32,039)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings (repayment) of line of credit with related party, net		(20,000)
Borrowings (repayment) from line of credit from bank, net	(35,286)	144,887
(Repayment) of note payable	724	(4,943)
Net cash provided (used) by financing activities	(34,562)	119,944
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENT	(16,029)	20,972
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	31,301	64,493
CASH AND CASH EQUIVALENTS AT END OF PERIOD	15,272	85,465
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	88,117
Investment in real estate limited liability company exchanged for reduction of line of credit with related party	300,000
Loans held for sale exchanged for reduction in line of credit with related party	10,000
REO converted to rental property	$ 69,761

Note 1 - Organization and Summa

Note 1 - Organization and Summary of Significant Accounting Policies	9 Months Ended
	Sep. 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. The financial statements of GFI, presented in this Form 10Q are unaudited and reflect, in the opinion of Management, a fair presentation of operations for the three and nine month periods ended September 30, 2016 and September 30, 2015. All adjustments of a normal recurring nature and necessary for a fair presentation of the results for the periods covered have been made. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the applicable rules and regulations of the Securities and Exchange Commission. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Form 10K for the year ended December 31, 2015 as filed with Securities and Exchange Commission. The results of operations for the three and nine months ended September 30, 2016, are not necessarily indicative of the results expected for the full fiscal year or for any other fiscal period. 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 September 30, 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	9 Months Ended
	Sep. 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: September 30, 2016 December 31, 2015 Residential $ 118,456 $ 253,853 Land 31,366 240,037 Commercial 313,698 10,000 Loans held for sale - Total $ 463,520 $ 503,890 The following table presents a reconciliation of loans held for sale measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the nine months ended September 30, 2016 and 2015: September 30, 2016 2015 Beginning Balance $ 503,890 $ 611,400 New loans 166,079 15,000 Principal payments received (14,355) (10,806) Proceeds on sale of loans (120,000) (25,337) Gain on sale of loans 21,258 - Converted to rental property (88,117) - Loan exchanged for reduction in line of credit, related party (10,000) - Fair value adjustment - (67,893) Repossession expenses 4,765 5,367 Ending Balance $ 463,520 $ 527,731 During the nine months ended September 30, 2016, the Company funded two loans for $166,079, 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	9 Months Ended
	Sep. 30, 2016
Notes
Note 3- Real Estate Owned:	NOTE 3- REAL ESTATE OWNED: The Company's fair value of REO consisted of the following: September 30, 2016 December 31, 2015 Residential $ 7,710 $ - Land 16,382 23,441 Commercial 1,299 4,010 Total $ 25,391 $ 27,451 The following table presents the change in balance sheet carrying values associated with REO for the nine months ended September 30, 2016 and 2015: September 30, 2016 2015 Beginning Balance $ 27,451 $ 44,392 REO transferred from loans held for sale 88,117 - Proceeds from sales of REO - - REO converted to rental property (69,761) - Fair value adjustment (20,000) - Net change in holding costs (416) - Ending Balance $ 25,391 $ 44,392 During the nine months ended September 30, 2016, the Company converted one REO to Rental property. We transferred two loans held for sale to REO for $88,117. The company also adjusted fair value on one REO totaling $ (20,000).

Other Assets Disclosure

Other Assets Disclosure	9 Months Ended
	Sep. 30, 2016
Notes
Other Assets Disclosure	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 a development stage company being financed by outside sources of capital. At this time, Flyback is currently negotiating future financing capital. The Company has accounted for the investment using the cost method. At the time the impairment with the measurement of the loss was recognized in earnings. Any recoveries to the impairment cannot be recognized and shall not be adjusted for subsequent recoveries in fair value. 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. 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 September 30, 2016 and 2015, the Company recorded a (income) loss of $4,097 and ($813), respectively, and for the nine months ended September 30, 2016 and 2015, the Company recorded a (income) loss of ($265,638) and $1,089, respectively. During the nine months ended September 30, 2016 and 2015, the Company advanced $-0- and $22,039 for property taxes and interest owing. During the quarter ended March 31, 2016, one limited liability company 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 Property: 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 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 nine months ended September 30, 2016 and 2015, the Company recognized $4,500 and $13,500 in rental income. This is a commercial building being depreciated over thirty-nine (39) years. Depreciation accrues at $179 per month. The Company recorded depreciation of $877 and $2,630 for the three and nine months ended September 30, 2016 and 2015. In September 2016, the Company foreclosed on a loan previously held for sale in Lewiston, Idaho through the bankruptcy courts, the property is being operated as Emperor of Indian restaurant. The property was placed into real estate owned during the six month ended June 30, 2016. It was held at a net carrying value of $69,761. The restaurant was subsequently leased on a two year lease agreement for $1,200 per month with an option to purchase for $45,000. During the three month ended September 31, 2016 the company recognized $1,500 in rental income. Fair value of the property was determined to be $45,000 on the date of transfer based on appraisal and contract terms of the lease. 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. For the three months ended September 30, 2016 and 2015, the Company recorded amortization of $5,161, respectively and had four and fourteen lots leased with rental income of $-0- and $15,910, respectively. For the nine months ended September 30, 2016 and 2015, the Company recorded amortization of $15,482, respectively and had four and seventeen lots leased and had rental income of $1,528 and $49,860, respectively. 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	9 Months Ended
	Sep. 30, 2016
Notes
Note 5 - Lines of Credit:	NOTE 5 — LINES OF CREDIT: GFI has a $250,000 line of credit with Riverbank. At September 30, 2016 and December 31, 2015 the balance owing is $134,714 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 October 7, 2016 the line of credit was extended to December 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 September 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. (See 8-K filed February 8, 2016) Effective August 1, 2016, the company amended the Warehouse Line of Credit Promissory Note Agreement to four (4%) percent interest to be paid monthly in common stock. In addition, the Company issued 50,000 shares of its common stock valued at $5,000 as a loan renewal fee for the three months ended September 30, 2016. (See exhibit 10) Also 61,425 shares of the company common stock were issued for a value of $6,142 in interest for the three month ended September 30, 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	9 Months Ended
	Sep. 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. 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	9 Months Ended
	Sep. 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 September 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	9 Months Ended
	Sep. 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 nine months ended September 30, 2016 and year ended December 31, 2015. John R. Coghlan, Officer and Director On October 7, 2016, John R. and Wendy 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 September 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 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. For the year ended December 31, 2015, the Company purchased two travel trailer from JC Housing, LLC for $30,000. Coghlan Family Corporation “CFC” On September 30, 2016, CFC was issued 30,192 shares of common stock for a value of $3,019 in interest on the Warehouse Line of Credit. On August 31, 2016, CFC was issued 31,233 shares of common stock for a value of $3,123 in interest on the Warehouse Line of Credit. On August 1, 2016, CFC amended the Warehouse Line of Credit and 50,000 shares of common stock was issued. (See Note 5) 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 quarter ended September 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 September 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 September 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 nine months ended September 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 nine months ended September 30, 2016. For the year ended December 31, 2015, the Company purchased two travel trailer from JC Housing, LLC for $30,000.

Note 1 - Organization and Sum14

Note 1 - Organization and Summary of Significant Accounting Policies: Use of Estimates (Policies)	9 Months Ended
	Sep. 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)	9 Months Ended
	Sep. 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.

Note 1 - Organization and Sum16

Note 1 - Organization and Summary of Significant Accounting Policies: Real Estate, Policy (Policies)	9 Months Ended
	Sep. 30, 2016
Policies
Real Estate, Policy	Real estate leasehold interest –

Note 1 - Organization and Sum17

Note 1 - Organization and Summary of Significant Accounting Policies: Loans held for sale (Policies)	9 Months Ended
	Sep. 30, 2016
Policies
Loans held for sale	Loans held for sale –

Note 1 - Organization and Sum18

Note 1 - Organization and Summary of Significant Accounting Policies: Real estate owned (Policies)	9 Months Ended
	Sep. 30, 2016
Policies
Real estate owned	Real estate owned –

Note 1 - Organization and Sum19

Note 1 - Organization and Summary of Significant Accounting Policies: Income tax (Policies)	9 Months Ended
	Sep. 30, 2016
Policies
Income tax	Income tax

Note 1 - Organization and Sum20

Note 1 - Organization and Summary of Significant Accounting Policies: Earnings Per Share, Policy (Policies)	9 Months Ended
	Sep. 30, 2016
Policies
Earnings Per Share, Policy	Earnings per share September 30, 2016 2015 Stock options 261,000 261,000 Convertible debt - 625,000 Total possible dilution 261,000 886,000

Note 1 - Organization and Sum21

Note 1 - Organization and Summary of Significant Accounting Policies: Reclassifications (Policies)	9 Months Ended
	Sep. 30, 2016
Policies
Reclassifications	Reclassifications

Note 1 - Organization and Sum22

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)	9 Months Ended
	Sep. 30, 2016
Tables/Schedules
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share	September 30, 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)	9 Months Ended
	Sep. 30, 2016
Tables/Schedules
Schedule of Other Assets	September 30, 2016 December 31, 2015 Residential $ 118,456 $ 253,853 Land 31,366 240,037 Commercial 313,698 10,000 Loans held for sale - Total $ 463,520 $ 503,890

Note 2 - Loans Held For Sale_24

Note 2 - Loans Held For Sale: Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Tables)	9 Months Ended
	Sep. 30, 2016
Tables/Schedules
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis	September 30, 2016 2015 Beginning Balance $ 503,890 $ 611,400 New loans 166,079 15,000 Principal payments received (14,355) (10,806) Proceeds on sale of loans (120,000) (25,337) Gain on sale of loans 21,258 - Converted to rental property (88,117) - Loan exchanged for reduction in line of credit, related party (10,000) - Fair value adjustment - (67,893) Repossession expenses 4,765 5,367 Ending Balance $ 463,520 $ 527,731

Note 3- Real Estate Owned_ Real

Note 3- Real Estate Owned: Real Estate Owned, Disclosure of Detailed Components (Tables)	9 Months Ended
	Sep. 30, 2016
Tables/Schedules
Real Estate Owned, Disclosure of Detailed Components	September 30, 2016 December 31, 2015 Residential $ 7,710 $ - Land 16,382 23,441 Commercial 1,299 4,010 Total $ 25,391 $ 27,451

Note 3- Real Estate Owned_ Othe

Note 3- Real Estate Owned: Other Real Estate, Roll Forward (Tables)	9 Months Ended
	Sep. 30, 2016
Tables/Schedules
Other Real Estate, Roll Forward	September 30, 2016 2015 Beginning Balance $ 27,451 $ 44,392 REO transferred from loans held for sale 88,117 - Proceeds from sales of REO - - REO converted to rental property (69,761) - Fair value adjustment (20,000) - Net change in holding costs (416) - Ending Balance $ 25,391 $ 44,392

Note 1 - Organization and Sum27

Note 1 - Organization and Summary of Significant Accounting Policies (Details)	9 Months Ended
	Sep. 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.
Basis of Accounting	The financial statements of GFI, presented in this Form 10Q are unaudited and reflect, in the opinion of Management, a fair presentation of operations for the three and nine month periods ended September 30, 2016 and September 30, 2015. All adjustments of a normal recurring nature and necessary for a fair presentation of the results for the periods covered have been made. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the applicable rules and regulations of the Securities and Exchange Commission. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Form 10K for the year ended December 31, 2015 as filed with Securities and Exchange Commission.

Note 1 - Organization and Sum28

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	9 Months Ended
	Sep. 30, 2016	Sep. 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_29

Note 2 - Loans Held For Sale: Schedule of Other Assets (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Details
Loans and Leases Receivable, Gross, Consumer, Real Estate	$ 118,456	$ 253,853
Land Available-for-sale	31,366	240,037
Loans and Leases Receivable, non-consumer	313,698	10,000
Loans held for sale	$ 463,520	$ 503,890

Note 2 - Loans Held For Sale_30

Note 2 - Loans Held For Sale: Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Details) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Details
Fair Value Assets Liabilities Measured On Recurring Basis Beginning Balance	$ 503,890	$ 611,400
Mortgage Loans on Real Estate, New Mortgage Loans	166,079	15,000
Debt Instrument, Periodic Payment, Principal	(14,355)	(10,806)
Proceeds from Sales of Assets, Investing Activities	(120,000)	(25,337)
(Gain) on sale of loan	21,258
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers out of Level 3	(88,117)
Loan held for sale exchanged for reduction in line of credit with related party	(10,000)
Adjustments to fair value.		(67,893)
Foreclosed Real Estate Expense	4,765	5,367
Fair Value, Assets and Liabilities Measured on Recurring Basis, Gain (Loss) Included in Earnings	$ 463,520	$ 527,731

Note 2 - Loans Held For Sale (D

Note 2 - Loans Held For Sale (Details) - USD ($)	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Loans held for sale	$ 463,520	$ 503,890
Loans exchanged to reduce credit line	10,000
Loans funded
Loans held for sale	166,079
Loans sold
Proceeds from Sale of Loans Held-for-sale	125,000
Loans exchanged
Loans exchanged to reduce credit line	$ 10,000

Note 3- Real Estate Owned_ Re32

Note 3- Real Estate Owned: Real Estate Owned, Disclosure of Detailed Components (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015
Details
Residential	$ 7,710
Land	16,382	$ 23,441
Commercial	1,299	4,010
Real estate owned	$ 25,391	$ 27,451	$ 44,392

Note 3- Real Estate Owned_ Ot33

Note 3- Real Estate Owned: Other Real Estate, Roll Forward (Details)	9 Months Ended
	Sep. 30, 2016USD ($)	Dec. 31, 2015USD ($)	Sep. 30, 2015USD ($)
Details
Property Subject to or Available for Operating Lease, Net	$ 25,391	$ 27,451	$ 44,392
Transferred from Loans Held for Sale	88,117
REO converted to rental property	$ (69,761)
Real Estate Owned, Valuation Allowance, Valuation Increase	(20,000)
Real Estate Owned, Valuation Allowance, Period Increase (Decrease)	$ (416)

Note 3- Real Estate Owned (Deta

Note 3- Real Estate Owned (Details)	9 Months Ended
	Sep. 30, 2016USD ($)
Details
Loans held for sale converted to REO	$ 88,117
REO Fair Value Adjustment	(20,000)

Other Assets Disclosure (Detail

Other Assets Disclosure (Details) - USD ($)	Jun. 26, 2015	Feb. 24, 2015	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 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 September 30, 2016 and 2015, the Company recorded a (income) loss of $4,097 and ($813), respectively, and for the nine months ended September 30, 2016 and 2015, the Company recorded a (income) loss of ($265,638) and $1,089, respectively. During the nine months ended September 30, 2016 and 2015, the Company advanced $-0- and $22,039 for property taxes and interest owing. During the quarter ended March 31, 2016, one limited liability company 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 Property: 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 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 nine months ended September 30, 2016 and 2015, the Company recognized $4,500 and $13,500 in rental income. This is a commercial building being depreciated over thirty-nine (39) years. Depreciation accrues at $179 per month. The Company recorded depreciation of $877 and $2,630 for the three and nine months ended September 30, 2016 and 2015. In September 2016, the Company foreclosed on a loan previously held for sale in Lewiston, Idaho through the bankruptcy courts, the property is being operated as Emperor of Indian restaurant. The property was placed into real estate owned during the six month ended June 30, 2016. It was held at a net carrying value of $69,761. The restaurant was subsequently leased on a two year lease agreement for $1,200 per month with an option to purchase for $45,000. During the three month ended September 31, 2016 the company recognized $1,500 in rental income. Fair value of the property was determined to be $45,000 on the date of transfer based on appraisal and contract terms of the lease.
Other Depreciation and Amortization			$ 877		$ 2,630
Equity, Fair Value Disclosure							$ 195,065
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. For the three months ended September 30, 2016 and 2015, the Company recorded amortization of $5,161, respectively and had four and fourteen lots leased with rental income of $-0- and $15,910, respectively. For the nine months ended September 30, 2016 and 2015, the Company recorded amortization of $15,482, respectively and had four and seventeen lots leased and had rental income of $1,528 and $49,860, respectively. 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		$ 15,482
Capital Leases, Income Statement, Lease Revenue				$ 15,910	1,528	$ 49,860
Lebanon Oregon
Other Recurring Income			4,500		13,500
Lewiston Idaho
Other Recurring Income			1,500
Addition to REO			69,761		69,761
Option to purchase value			45,000		45,000
Equity, Fair Value Disclosure			45,000		$ 45,000
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 a development stage company being financed by outside sources of capital. At this time, Flyback is currently negotiating future financing capital. The Company has accounted for the investment using the cost method. At the time the impairment with the measurement of the loss was recognized in earnings. Any recoveries to the impairment cannot be recognized and shall not be adjusted for subsequent recoveries in fair value.
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. 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 ($)	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Details
Line of Credit Facility, Current Borrowing Capacity	$ 250,000
Long-term Line of Credit	$ 134,714	$ 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
Loans exchanged to reduce credit line	10,000
Limited Liability Company Interest value exchanged	300,000
Repayments of Lines of Credit	$ 310,000

Note 6 - Notes Payable (Details

Note 6 - Notes Payable (Details) - USD ($)	3 Months Ended	9 Months Ended
	Mar. 31, 2016	Sep. 30, 2016
Details
Debt Instrument, Convertible, Beneficial Conversion Feature		$ 128,750
Payments of Financing Costs	$ 29,000

Note 7 - Series B Preferred S38

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 Transac39

Note 8- Related-party Transactions (Details)	9 Months Ended
	Sep. 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.