10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ending December 31, 2017

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

For the transition period from                 to                   

Commission file number:  333-103331

Genesis Financial, Inc.

(Name of Issuer in its Charter)

Wyoming	03-0377717
(State of Incorporation)	(IRS Employer Identification No.)

3773 St., Ste. 301, Post Falls, ID	83854
(Address of principal executive offices)	(Zip Code)

Issuer’s telephone number: (208) 457-9442

Securities Registered Pursuant of Section 12(b) of the Act: None

Securities Registered Pursuant of Section 12(g) of the Act: None

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

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

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes [  ] No [X]

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.

Large accelerated filer [  ] Accelerated filer [  ] Non-accelerated filer [  ] Smaller reporting company [X]

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant on June 30, 2017, the last business day of the registrant’s most recently completed second fiscal quarter, based on the average bid and asked price of such common equity of the registrant’s common stock on the Over the Counter QBwas $868,928. The sum excludes the shares held by officers, directors, and stockholders whose ownership exceeded 10% of the outstanding shares at June 30, 2017, in that such persons may be deemed affiliates of the Company. This determination of affiliate status is not necessarily a conclusive determination for other purposes.  

As of February 14, 2018 there were 879,763 common shares issued and outstanding.

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Genesis Financial, Inc.

FORM 10-K

December 31, 2017

TABLE OF CONTENTS

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PART I

ITEM 1.  Business.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This annual report on Form 10-K contains many forward-looking statements, which involve risks and uncertainties, such as our plans, objective, expectations and intentions. You can identify these statements by our use of words such as "may," "expect," "believe," "anticipate," "intend," "could," "estimate," "continue," "plans," or other similar words or phrases. Some of these statements include discussions regarding our future business strategy and our ability to generate revenue, income, and cash flow. We wish to caution the reader that all forward-looking statements contained in this Form 10-K are only estimates and predictions. Our actual results could differ materially from those anticipated as a result of risk facing us or actual events differing from the assumptions underlying such forward-looking statements. Readers are cautioned not to place undue reliance on any forward-looking statements contained in this Annual Report on Form 10-K. We undertake no obligation to update any of these factors or to publicly announce any change to our forward-looking statements made herein, whether as a result of new information, future events, changes in expectations or otherwise.

OVERVIEW

New Developments

On September 8, 2017, Genesis Financial, Inc. (the "Company") entered into a Capital Stock Exchange Agreement (the “Exchange Agreement”) with EPOINT Payment Corp., a Delaware corporation ("EPOINT"). The anticipated target closing date is no later than February 15, 2018, or such earlier date as may be determined by the parties.  During the first quarter of 2018, the Company will proceed to perform its obligations under the Exchange Agreement.  For additional details please review the Exchange Agreement filed on our Current Report filed on September 11, 2017.

Following the acquisition of EPOINT and in accordance with the Exchange Agreement's provisions, the Company plans to immediately commence the disposal and discharge of its pre-acquisition assets and the majority of its liabilities.  The combined companies will focus their business efforts on financial services delivering a range of products and services including but not limited to, micro credit advances, mobile phone device financing, money transfers, mobile wallet and prepaid debit cards, bill payments, mobile top up, check processing, insurance and travel.

On December 12, 2017, the Company implemented a twenty for one (20:1) reverse split. In this annual report unless otherwise noted, all references to share activity are retrospectively adjusted to post-split figures.

INTRODUCTION. Genesis Financial, Inc. ("GFI") was incorporated in the State of Washington on January 24, 2002 for the purpose of purchasing and reselling seller financed real estate loans (also referred to as "loans" or "real estate notes" or "portfolio"). On January 25, 2016, the Company moved its corporate domicile from Washington State to Wyoming State.  All loans purchased or originated, are held for sale, and are carried on the financial statements at cost or fair value, whichever is less.  We purchase seller financed real estate loans from sellers directly or from sellers who are introduced to GFI by brokers. When the owner of a real estate loan wishes to sell the loan, the owner may contact a broker or GFI directly. Seller financed real estate loans are originated by the selling owner of real property.  This is an unconventional form of financing which does not involve banks or mortgage companies. When we commenced business, we initially focused on purchasing residential and commercial real estate loans and business notes from $25,000 to $250,000 in value, and the brokering of larger transactions. As the business grew, we expanded our services to include larger loans and other forms of cash flow investment instruments.

In 2007, the sub-prime real estate markets started to experience problems, and by mid-2008, the market was in a free-fall.  The Company started to experience increased delinquencies, and the collapse of the financial markets eliminated any chance of our payors being able to refinance or sell their properties, which resulted in increased loan defaults and repossessions.  Effective January 1, 2009, the Company out-sourced all its operations and servicing functions to reduce expenses during this downturn. Management tightened up the Company's underwriting parameters.  Management focused its efforts on maintaining the performing portions of the portfolio, selling repossessed collateral properties, and reducing debt.

INDUSTRY BACKGROUND. Sellers have used real estate notes ever since men started claiming parcels of land as their own. Historically, no market existed for sale of real estate notes, so a holder of a note typically collected the payments from the borrower, and held the note to maturity. It is only in the last 25 years or so that an active market for selling real estate loans on a large scale has developed.

In the latter part of 2008, national economic conditions made any real estate lending very precarious, forcing the Company to againevaluate its business plan. Real estate loans again became our primary target.  GFI has been forced to focus its business towards more commercial real estate lending.

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COMPETITIVE ADVANTAGE. In this competitive environment, GFI sought to distinguish its offering from those of our competitors through excellent service, rapid customer response, and consistent and fair underwriting evaluations and procedures. We believed that our market focus on superb service and our existing contacts in the industry would provide a sustainable competitive advantage.  We also believed that our ability to diversify into other related markets, such as commercial real estate lending, would give us a competitive advantage. From January 1, 2009 through December 31, 2011, the Company out-sourced all its operations and servicing functions to reduce expenses, and further tightened underwriting parameters, while management focused on selling repossessed collateral properties and reducing company debt. We outsourced portfolio management to Genesis Finance Corporation, a company owned and controlled by Mike Kirk, a former executive officer and director of Genesis Financial, Inc.

Since January 1, 2011 the Company has operated with one part timepaid employee and outsourcing the portfolio management in exchange for office expenses incurred by Genesis Finance Corporation.

INVESTMENT POLICIES. We purchase seller financed real estate loans, originate commercial real estate loans, and pursue other forms of cash flow instruments that make sense.  The real estate loans that we purchase are primarily in the sub-prime market, and may be secured by residential property, commercial property, and/or unimproved land. We will look at each individual loan as a unique opportunity. The principal balance of loans or interests in loans that we purchase is generally discounted to provide us with a target return of 12 – 15% interest per annum or more and will be secured by real properties. We will evaluate the adequacy of the underlying real property value which will serve as collateral for our purchase on a case by case basis.

This evaluation may include reviewing a property's title report, the loan documentation including payment histories and credit information, when available.  We may conduct a physical inspection and may obtain an appraisal of the property's value.  The primary factor utilized in the purchase of a seller financed real estate loan is the ratio between the property value and the investment amount that we pay the seller.  Based on these factors, we will purchase the loan at a discount to the principal balance.  It is management’s intent to hold loans for less than a year but due to the economic circumstances, loans many be held for longer periods.

In regard to our commercial lending, GFI focused on "hard money lending" which was typically a short term loan collateralized with non-conforming types of real property with a borrower who may have a compromised credit rating.  GFI followed two general underwriting principles in its "hard money" lending, (1) only make a loan if you want to own the collateral and (2) never lend an amount of money which might exceed the price you would be willing to pay for the collateral as a purchaser. Hard money loans are normally equity based, not credit based.  GFI originally targeted a 50% maximum loan-to-value ratio.

HISTORICAL INVESTMENT RETURNS. During the past four years our investment returns have been negative when factoring in the non-performing delinquent loans and real estate owned (“REO”: real estate acquired through a loan foreclosure).  Until we are able to sell the REO's we will not be able to determine the actual rates of return.  In some geographic regions real estate market values have flattened, or have begun to rise, but in most areas values continue to deflate and sales of REO's remains weak.

MARKETING. We will undertake to maintain our marketing presence through contacts, individual and corporate, made over the previous eleven years.

PRODUCTS. We invest in seller financed real estate loans, originate commercial real estate loans, and pursue other forms of cash flow instruments which we believe will support our investment guidelines.

We may purchase longer term loans (three to five year terms) with the intent to hold until maturity. We may also purchase long term loans or properties with the intent to hold for resale in the future.  Should the secondary institutional markets open back up, we may also pursue sales into those markets.

BROKERED LOAN AND REFERRAL FEES. From time to time, we will be presented with residential and commercial financing requests that do not conform to our current investment policies. In these cases, we refer them to other financing sources which may fund the transaction. In such cases, we may earn referral or finder’s fees for simply referring the prospective transaction. In some cases, we may agree to prepare purchase documents and close the transaction in a "simultaneous closing" in which the funding source remits the purchase funds to the closing agent and pays us the referral fee that we earned on the transaction.

OTHER TYPES OF RESIDENTIAL REAL ESTATE LOANS. In most instances, our purchases of seller financed real estate loans involve the purchase of the entire loan balance. In some instances, this method may be modified in various ways to increase our return and/or mitigate our risk.

NON-REAL ESTATE CASH FLOWS. There are a number of cash flow products available to purchase which are not secured by real estate but are paid by credit worthy payors (e.g. annual lottery payments paid by state governments, structured settlements payable by large companies, insurance company annuities paid over time, etc.).  Lucrative yields can be earned by purchasing these types of products. The secondary market for these products has been very limited in past years. However, the exodus of investors from the real estate markets has caused these products to become highly desirable, but this elevated competitive interest has driven profitability margins to such a low level that GFI cannot be competitive as a funder. GFI may take advantage of opportunities to broker such products on a case-by-case basis.

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INTEREST ONLY AND BALLOON PAYMENT LOANS. From time to time, GFI may purchase loans calling for “interest only” payments for a stated number of installment periods. Interest only loans may be subject to greater degrees of risk than loans requiring principal and interest payments because the borrower in an interest only contract is not demonstrating a present ability to repay the principal. Similar risks exist in loans with balloon payment obligations. While the risk associated with investment in these types of loans may be higher, GFI believes that it is in a position to control the risk through the underwriting process. When higher risk loans are proposed, our underwriter will adjust pricing or review the collateral position to assess the repayment and collateral value risks. GFI is primarily a collateral based lender, so this type of risk assessment on interest only or balloon payment loans is very similar to the risk assessment undertaken on other seller financed real estate loans and with commercial real estate loans. In many instances, GFI may not have access to borrower credit reports, payment histories or other forms of information available to traditional lenders.

These loans were created through the sale of real estate property between private parties, where the property seller provides the sale financing, rather than the buyer acquiring financing through conventional channels.  At some point in time, after the property sale, the seller then decides to sell the loan. The differences in this type of loan from a conventional loan in the secondary markets are:

·

there is no standardization of documentation; these loans could be secured by a Note and Deed of Trust, Note and Mortgage, or a Real Estate Contract prepared by the seller or his/her attorney.

·

there is no buyer credit qualifying documentation, as the seller normally did not require any at the time of sale.

·

there is no appraisal, or other property information that would substantiate the sales price, because the buyer normally would not have required that information at the time of sale.

·

there is no payment history showing buyer performance, unless the seller has a third-party servicer collecting the payments.

By placing a higher degree of reliance on the collateral offered, the underwriters are able to match the pricing of the transaction and the targeted return with the risk of non-payment. In general, interest only loans will result in a lower loan to value percentage than comparable loans with principal and interest amortization schedules.  In present market conditions, loans with balloon payments are viewed as very high risk if the balloon is due within a couple years, as the availability of refinancing is very limited, and many properties have mortgage debt exceeding the present value of the property securing the debt.

SUBMITTING BROKER’S QUALIFICATIONS. GFI will be very selective in choosing the brokers from whom it will accept real estate loan submissions. Due to limited personnel resources, and the volatile real estate values, GFI will not accept submissions from unknown or inexperienced brokers. Loan packages must be complete and accurate, and take into account present market conditions and property values. In our opinion, only experienced brokers are capable and reliable for   meeting our investment policies. We use brokers who specialize in our type of contract loan products.

COMMERCIAL REAL ESTATE LENDING. GFI was a small scale commercial real estate lender prior to 2004, supplementing the Company’s seller financed loan acquisitions business.  In the latter part of 2004, due to the competitiveness of the seller financed loan market, management decided to expand the Company’s efforts in the commercial lending market.  Our broker network supplied us with potential borrowers. Since the management and staff of GFI had considerable previous experience with commercial lending, it was a natural and comfortable adjustment. As with any business venture, the Company looked throughout the commercial lending industry for a “niche”. We determined that GFI was best suited to do “Hard Money” commercial lending. Hard money lenders focus on those loans which are usually smaller in size, shorter terms (more of an interim financing), often collateralized by non-conforming property types, or the borrowers do not qualify for conventional financing due to credit history problems.  Typically, hard money loans command a higher interest rate providing a smaller, high cost-of-funds lender like GFI with the opportunity to earn a favorable return on investment.

Although hard money loans carry a higher degree of risk due to the non-conforming nature of the loans, that risk is partially offset with the lower loan-to-value ratios, which seldom exceed 60%, providing a collateral cushion for the lender if the property were to be repossessed and resold. Throughout 2008, as real estate values throughout the nation continued to decline, it became apparent that loan to value ratios as low as even 50% - 60% were insufficient to provide that cushion for the lender, because values had dropped in some geographic areas as much as 50% - 70%.  As of December 31, 2012 it appears that the market has stabilized.

COMPETITION. When GFI formally entered the hard money markets in the latter half of 2004, the market was very competitive and fragmented.  Most hard money lenders operated on a local basis limiting their lending to borrowers and collateral properties located a short distance from their base of operations.  They also marketed only to the retail market, ignoring brokers and dealing directly with the borrowers.

Beginning in late 2007, we noticed that some of the commercial lenders were cutting back and tightening their lending parameters. Some were even exiting the business, or closing operations due to high delinquencies and repossessions.  By the end of 2010, a large percentage of the lenders had exited the business or suspended operations, and virtually every remaining commercial real estate lender had severely tightened their parameters.  The Company expects this trend to continue.

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MARKET ANALYSIS. The hard money market was quite strong in 2004, at the time of the Company’s increased focus in making these loans, and continued that way throughout 2006.  Frequent foreclosure litigation and collateral repossessions are an expected part of the hard money industry, in contrast to the conventional markets. With the exception of those few transactions with unusual circumstances affecting the outcome, most problem loans were eventual settled and the Company experienced a loss.

In 2007, the Company started to experience increased delinquencies, primarily due to a slow-down in the borrower’s business, resulting in reduced cash flows.  The prior workouts that resulted in a payoff before repossession declined dramatically.  This appeared to be due to the fact that the borrowers could not refinance their collateral properties, nor could they sell their properties to pay off the loan.  This resulted in more repossessions, and the Company learned that it could not sell those repossessed properties as easily or for their appraised values.

From December 31, 2007 through December 31, 2010 the real estate markets throughout the country were experiencing dramatic down-turns in values, and at the same time the lending markets were tightening up making refinancing very difficult, regardless of the property type.  The Company was experiencing increasing delinquencies resulting in increased foreclosure litigation expense and eventual collateral repossession.  In several cases, it was apparent that the value of the collateral had dropped below the principal loan balance which indicated the potential for significant future financial losses.  The Company is currently concentrating on the collection and liquidation of prior loans and real estate and is making few new loans.

On January 1, 2009, management decided to make some major adjustments to the Company’s business plans.  These adjustments included: overhead expense reduction by outsourcing the day-to-day operations of the Company, focus on reducing the Company’s debt through a restructuring of terms with our credit facilitators, to pursue the sale of Company assets, to continue acquisitions and originations only on pre-sold loans,  focus on managing delinquent accounts through increased collection activity and workouts,  increase the focus on maintenance and resale of REO assets, and  diversify asset acquisitions into non-real estate assets.  

As of January 1, 2011, the Company had down-sized enough to manage a sizable portion of its own affairs and renegotiated its outsourcing agreement with Genesis Finance Corporation by lowering the monthly fee. As of January 1, 2012 the monthly fee was terminated and the outsourcing services were offset by general office expenses paid by the Company on behalf of Genesis Finance Corporation, a company owned by Michael A. Kirk, an affiliate of Genesis Financial, Inc. On January 1, 2011, GFI hired one employee, Virginia Walters, to manage its affairs going forward.

As a result of the poor economic conditions and declining real estate values, GFI was compelled to seek out additional avenues to build shareholder value.  Management believed that investments in local startup companies could prove to be a good investment for the Company and provide an avenue of diversification.  

As part of the diversification plan the Company invested a portion of its assets in privately held companies as follows:

Flyback Energy, Inc.:

On November 23, 2010, the Company closed the purchase of an equity interest in Flyback Energy, Inc. (FEI), for $1,200,000. The purchase was for 2,666,667 shares of Series “B” Preferred Stock from Flyback Energy, Inc., a closely held Washington corporation payable on an installment basis. On April 25, 2011, the Company purchased 85,274 shares of Series “C” Preferred Stock for $50,000 which is convertible at $0.60 per share and bears a 5% dividend rate.

The Flyback Series "B" Preferred shares are convertible into Flyback common shares on a one for one (1:1) basis and the conversion pricing is subject to adjustments for certain diluting issues of common stock, subdivisions or combinations of common stock, reclassifications, exchanges and/or substitutions of stock. The Company is due 421,480 shares of common stock because of the dilution provision.

Flyback Energy, Inc. is a privately-held company that has developed a unique and proprietary electronic switch design that offers control over electrical power and magnetic fields.

The founders of Flyback Energy, Inc. have solved an electromagnetic energy loss problem. They focused their research on totally controlling the rise and collapse of magnetic fields present in inductive circuits, equipment and processes. After years of methodical experimentation, the Flyback team has created and patented practical breakthrough magnetic energy recovery (MER) technology.

With this patented technology, Flyback Energy is actively developing reliable products to capture and recover magnetic energy losses and then insert that otherwise wasted energy back into the power circuit. The Flyback technology also mitigates problematic harmonic resonance, electromagnetic interference (EMI), excessive heat and other induction issues.

This technology provides control of induction and resistive devices, and power conversion processes between AC and DC electrical systems. Flyback solutions result in lower energy cost, cooler operating temperatures and longer useful life for lighting system components, transformers, motors and controllers.

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Flyback’s Magnetic Energy Recovery technology creates value across a wide range of electromagnetic applications. Most electrical input supply can be cost effectively switched and controlled, including such traditional sources as AC grid power, fuel-fired and hydro-generated power, and DC sources such as solar cells, wind generation and battery arrays. Flyback is currently developing products to serve a special purpose – where energy savings and high electrical efficiency are valued.

Genesis Financial, Inc. reduced the carrying value of its Flyback Energy common shares to $0.067 per share, the last known arm’s length common share sale.  Flyback Energy, Inc. is still a development stage company being financed by outside sources of capital.  At this time, we believe the Flyback has some financing capital to develop certain defined products.

Digi Outdoor Media, Inc.

In 2014, the Company loaned Placer Creek Mining Company (“Placer”) $150,000. The loan interest rate was 5.0% and the Company has an option to convert any or all of the amount due into an equity private placement of Placer. The Placer transaction was a related party transaction. (see Note 11: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.

Digi Outdoor Media, Inc. is a startup company in the business of building and leasing outdoor advertising signs.

On December 31, 2017, the Company due to legal action concerning Digi Outdoor Media booked an impairment charge of $150,000 to reduce the carrying value to $-0-.

Ambient Water Corporation (Formerly AWG International Water Corp.):

The Ambient Water Corporationis located in Spokane, Washington. In 2010 and 2011, the Company purchased a total of 7,380,433 common shares of the Ambient Water Corporation common stock for $500,000, at that time the purchase represented approximately 10% of the total outstanding shares.  

On May 19, 2016, by board action, the Company sold its interest in Ambient Water Corporation to John R. Coghlan (see Note 11) for $0.0003 per share, the fair value of the stock on the day of sale, $2,213, resulting in a recognized loss of $497,787. 

Rental Properties:  

At the end of 2013, the Company foreclosed a $85,534 loan held for sale in Lebanon, Oregon through the bankruptcy courts, the property is currently being operated as Duffy’s Bar. The bar was subsequently leased on a three (3) year lease agreement for $1500 per month, with the tenant paying all utilities and insurance. During the years ended December 31, 2016 and 2017, the company recognized $18,000 and $3,000 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 $2,143 and $-0- for the years ended December 31, 2016 and 2017. On March 8, 2017, by board action, the Company sold this property to Coghlan Family Corporation for $77,585, resulting in a gain on sale of $342.

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 year ended December 31, 2016 and 2017 the company recognized $2,175 and $8,925 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. This is a commercial building being depreciated over thirty-nine (39) years. The Company recorded depreciation of $692 and $577 for the year ended December 31, 2016 and 2017. On July 17, 2017, by board action, the Company sold this property to Coghlan Family Corporation for $30,000, resulting in a loss of ($17,670).

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Real Estate Leasehold Interest:

Halliday, North Dakota: During 2013 the Company completed the acquisition of a real property leasehold interest that consists of approximately 63 acres in the city of Halliday, North Dakota.  The lease term is fifteen (15) years and commenced on September 15, 2012.  The Company has an option to renew the lease for an additional 15 year term. Presently, the property consists of fifty (50) residential type lots.  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.

Limited Liability Corporations:

In 2013, the Company formed Hermiston 353, LLC to hold real property interests resulting from a loan foreclosure with multiple note interest holders of which Genesis holds a 13.1% interest valued at $54,691 as of December 31, 2017. In 2014, the Company formed North Edwards 435, LLC, another REO purposed entity to hold the real property interests resulting from a loan foreclosure with multiple note interest holders.  The Company's interest in North Edwards is 31.95% valued at $48,894 as of December 31, 2017.  The LLC’s are passive investments which each hold a single real estate REO property for sale.

DEFAULT PROCEDURES. Loans will be sold after short holding periods and defaults going forward are expected to be minimal. Some defaults will occur, however and we will take steps after we become aware of the default to protect our interests.  GFI operates under the policy that any loan payment over 90 days delinquent is a loan default.  In a default situation, we will pursue one or more of the following alternatives: discussion with the submitting broker, if any, concerning ways to remedy the default; an offer to re-write or modify the loan for the borrower/buyer as a means to cure the default, provided good evidence is available that the modification will be honored by the borrower/buyer; sale of the loan with the delinquency disclosed (possibly at a loss); acceptance of a property deed in lieu of foreclosure; and/or foreclosure and REO property sale.  

SECONDARY MARKET RESALES

OVERVIEW. Since inception, GFI has purchased loans and originated loans with the goal of resale to various secondary market and private investors. GFI attempts to resell the loans as soon as possible with a view toward optimizing gains on resale.  With the elimination of the secondary market and the participating secondary market buyers, the primary buyers have been accredited private investors.  The Company feels that these conditions will continue for the foreseeable future, but will continue to monitor the financial markets. We will continue to establish new relationships with any secondary market buyers as they become available.

GOVERNMENTAL REGULATION

Commercial real estate lending does not require special licensing and is not subject to governmental regulation. GFI does not originate residential loans and therefore is not subject to governmental regulation as a lender, bank, mortgage broker, or other regulated financial institution. Our business focuses on transactions that are not subject to governmental regulation and we intend to maintain this business focus for the foreseeable future.

EMPLOYEES

As of December 31, 2017the Company had one part-timeemployee Virginia Walters.

REPORTS TO SECURITY HOLDERS. The Company voluntarily files periodic reports with the United States Securities and Exchange Commission in accordance with the requirements of Section 15(d) of the Securities Exchange Act of 1934. The Company files quarterly reports on Form 10-Q, annual reports on Form 10-K and current reports on Form 8-K. The Company is currently classified as a Smaller Reporting Company under applicable SEC regulations.

Copies of all materials that we file with the SEC may be inspected and read without charge at the Public Reference Room of the SEC, 100 “F” Street NE, Washington, D.C. 20549. Interested persons may obtain information regarding the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

Copies of this material may be obtained at prescribed rates from the Public Reference Section of the Commission at 100 “F” Street NE, Washington, DC. 20549. The Securities and Exchange Commission also maintains a Web site (http://www.sec.gov) through which the information we file with the SEC can be retrieved.

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ITEM 1A.  Risk Factors

Not applicable to Smaller Reporting Companies.

ITEM 1B.  Unresolved Staff Comments

Not applicable to Smaller Reporting Companies.

2.  Properties

The Company’s principal executive offices are located at 3773 West 5^th Avenue, Suite 301, Post Falls, ID 83854. We have a month-to-month tenancy for our executive offices with West 3773 Fifth, LLC.  We believe that our office facilities are adequate for our present business activities.  Our annual rent is $14,500. The premises are owned by West 3773 Fifth, LLC which is 100% owned by John and Wendy Coghlan.  During fiscal year 2017, John Coghlan was the chairman of our board of directors, President, CEO and CFO.

The majority of the properties owned by the Company were acquired through foreclosure of various loans in our loan portfolio.  As of December 31, 2017, our REO properties have a total net carrying value of $-0- and Rental properties of $-0-.  The following table summarizes our REO properties:

Description	Location	Date Acquired	Units/Acres
One (1) lot and % RV park with clubhouse	Cusick, WA	2008	1 RV lot and 1.36% of RV park
Commercial Building	Lebanon, OR	2013	Commercial building and lot
Commercial Building	Lewiston, ID	2016	Commercial Building and lot

During fiscal year 2017 these three properties were sold to Coghlan Family Corporation.  See the "Related Party" footnotes for additional details.

ITEM 3.  Legal Proceedings

Presently, we are not subject to any material legal proceedings which might have an adverse impact on our financial statements.  In the normal course of business, the Company is the initiator of legal proceedings associated with judicial real estate foreclosures and title insurance matters related to our loan portfolio collateral interests.  

ITEM 4.  Mine Safety Disclosures

Not applicable.

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PART II

ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market For Registrant's Common Equity And Related Stockholder Matters

Our common stock is quoted on the OTC Markets QBunder the stock symbol GNFL.  The following table sets forth the high and low bid prices of our “post-split” common stock for the quarters ending December 31, 2016 and 2017 and interim periods.  The quotations set forth below reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

Table No. 1

Quarter Ended:
Fiscal 2016	High	Low
March 31	$5.80	$2.60
June 30	$4.00	$3.00
September 30	$3.01	$2.00
December 31	$3.60	$3.60
Fiscal 2017	High	Low
March 31	$2.40	$1.60
June 30	$2.00	$1.40
September 30	$3.40	$1.50
December 31	$4.00	$2.80

During the fourth quarter of 2017, the Company implemented a twenty for one (20:1) reverse stock split resulting in a higher share prices.   The market prices reported above have be adjusted to give retroactive effect to the reverse split.

(a)  Holders

As of December 31, 2017 our company had approximately 133 shareholders of record of its common stock holding 879,763 common shares.

(b)  Dividends

There are no restrictions imposed on the Company, which limit its ability to declare or pay dividends on its common stock, except for corporate state law limitations. No cash dividends have been declared or paid to date and none are expected to be paid in the foreseeable future.  

(c)   Recent Sales of Unregistered Securities.   

During the fourth quarter the Company did not offer or sell any equity securities.

(d)  Securities Authorized for Issuance under Equity Compensation Plans

Equity Compensation Plan Information

None

ITEM 6.  Selected Financial Data

Smaller Reporting Companies are not required to provide this data.

10

ITEM 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the financial information included elsewhere in this Annual Report on Form 10-K.

The purpose of this section is to discuss and analyze our financial condition, liquidity and capital resources and results of operations. You should read this analysis in conjunction with the financial statements and notes that appear elsewhere in this Annual Report on Form 10-K. This section contains certain "forward-looking statements" within the meaning of federal securities laws that involve risks and uncertainties, including statements regarding our plans, objectives, goals, strategies and financial performance. The Company’s actual results could differ materially from the results anticipated in these forward-looking statements as a result of factors set forth under "Disclosure Regarding Forward-Looking Statements" in this Annual Report on Form 10-K.

Genesis Financial, Inc. is engaged in the business of buying and selling seller financed real estate loans ("loans"), and originating commercial real estate hard money loans. We purchase loans at a discount and hold them for sale for a relatively short period to provide seasoning and value appreciation. After the holding period, we sell the loans. We expect to derive operating revenues from resales of loans at a profit, and from interest income derived from loans during the holding period. We originate commercial real estate loans and sell the loan, or participations in those loans, to accredited private investors.  From time to time, we also consider other forms of cash flow instruments when warranted.  GFI has also invested in two private companies with a view toward diversifying its investment portfolio.

PLAN OF OPERATIONS

On September 8, 2017, Genesis Financial, Inc. (the "Company") entered into a Capital Stock Exchange Agreement (the “Exchange Agreement”) with EPOINT Payment Corp., a Delaware corporation ("EPOINT"). The anticipated target closing date is no later than February 15, 2018, or such earlier date as may be determined by the parties.  During the first quarter of 2018, the Company will proceed to perform its obligations under the Exchange Agreement.  For additional details please review the Exchange Agreement filed on our Current Report filed on September 11, 2017.

Following the acquisition of EPOINT and in accordance with the Exchange Agreement's provisions, the Company plans to immediately commence the disposal and discharge of its pre-acquisition assets and the majority of its liabilities.  The combined companies will focus their business efforts on financial services delivering a range of products and services including but not limited to, micro credit advances, mobile phone device financing, money transfers, mobile wallet and prepaid debit cards, bill payments, mobile top up, check processing, insurance and travel.

RESULTS OF OPERATIONS

Revenues

Fiscal Year ended December 31, 2017 compared to year ended December 31, 2016.

During the years ended December 31, 2017 and 2016, the Company recognized revenues of $48,911 and $87,023, respectively, comprised of interest, processing fees, rental income and other revenues. The decrease in 2017 was due to decreased rental and interest income.

Revenues were not sufficient to support our operations.  Net loss from operations for the years ended December 31, 2017 and 2016 were ($523,036) and ($660,031), respectively.  The primary reasons for the losses were on the sale of rental property, fair value adjustments, and legal and auditing expenses related to public company reporting requirements.

At December 31, 2017 and 2016, loans held for sale totaled $306,109 and $347,755, respectively. The decrease in 2017 was due to loans being paid down and fair value adjustments.

Of the loans held for sale at December 31, 2017 and 2016, 50% and 52% of loans, respectively, were in default.  The default loan balance values were $159,292, at December 31, 2017 and $180,912, at December 31, 2016. At December 31, 2017 one of the six loans in default is the subject of a judicial proceeding where the Company seeks to foreclose upon the real property securing the defaulted loans.

At December 31, 2017 and 2016, real estate owned (REO) totaled $-0- and $14,999, respectively.  The decrease in REO is the result of the sale of all of the REO properties. These properties were sold to Coghlan Family Corporation a related party (see Note 11).

In 2016 we foreclosed one commercial property and subsequently leased it on a two-year lease at $1,200 per month with granting the lessee an option to purchase the premises for $45,000. In 2017 we did not complete any loan foreclosures.

11

Generally in each instance of payment default, it is GFI’s policy to stop accruing interest income when delinquency status is reached. GFI also performs a review of the adequacy of collateral on each default and records a write-down to market value if the collateral value is less than the loan’s principal balance on an aggregate basis by loan type. For this purpose, GFI categorizes loans as residential, commercial, land, and other.

General and Administrative Expenses

General and administrative expenses (“G&A”) for fiscal years ended December 31, 2017 and 2016 were $225,567 and $228,912, respectively. G&A primarily consists of executive compensation, rent and professional fees for legal, accounting and public relations, utilities, depreciation and maintenance.  The year over year increases and (decreases) for the fiscal years ended December 31, 2017 and 2016 were ($3,345) and $19,109, respectively.  The primary reasons for the changes were as follows:

Fiscal year ended December 31,	Increase (decrease)	Primary reasons for change
2017	($ 3,345)	Decrease due to reduction of depreciation and amortization  expense
2016	$ 19,109	Increase due to Insurance and Public Company expense

Interest Expense

For the years December 31, 2017 and 2016, interest expense amounted to $28,512 and $26,547, respectively. The reason for the increase in interest expense is due to borrowing from the RiverBank line of credit and the new loan with Coghlan Family Corporation.

Interest expense was associated with our lines of credit with (1) RiverBank, an unaffiliated lender, (2) our line of credit with Coghlan Family Corporation, a related party and (3) note payable to Coghlan Family Corporation, a related party.

Loan Portfolio Composition

For the years ended December 31, 2013 through 2017, the loan portfolio of purchased, sold and originated is as follows.

Table No. 3

Loan Types Purchased, Sold and Originated

2013
		Residential		Commercial		Land		Other
Originated	-	$0	1	$100,000	1	$10,400	2	$378,857
Purchased	-	$0	-	$0	-	$0	-	$0
Sold	2	$52,221	1	$288,368	-	$0	3	$408,857
2014
		Residential		Commercial		Land		Other
Originated	-	$0	-	$0	-	$0	-	$0
Purchased	-	$0	-	$0	-	$0	-	$0
Sold	2	$31,205	3	$239,437	4	$50,278	-	$0
2015
		Residential		Commercial		Land		Other
Originated	-	$0	-	$0	1	$15,000	1	$10,000
Purchased	-	$0	-	$0	-	$0	-	$0
Sold	1	$43,725	-	$0	2	$25,337	-	$0
2016
		Residential		Commercial		Land		Other
Originated	1	$40,000	-	$0	-	$0	1	$31,366
Purchased	-	$0	1	$134,714	-	$0	-	$0
Sold	2	$55,251	-	$0	-	$0	-	$0

2017
		Residential		Commercial		Land		Other
Originated	-	$0	-	$0	-	$0	-	$0
Purchased	-	$0	-	$0	-	$0	-	$0
Sold	-	$0	1	$5,440	1	$13,700	-	$0

12

LIQUIDITY AND CAPITAL RESOURCES

The Company’s principal sources of cash have been from loan sales, related party loans, unaffiliated party loans, funding agreements, rental and lease agreements and common and preferred stock private placements. The Company anticipates that its primary uses of cash will be adequate in order to meet the demands upon its current operations, and there will not be a need for additional funds to finance ongoing acquisitions of seller financed real estate loans and originations of commercial real estate hard money loans, and the expense of loan foreclosure and the maintenance and resale costs associated with REO properties.

At December 31, 2017 and December 31, 2016, we had cash available of $5,215 and $10,639, respectively, and $55,000 and $70,000, respectively was available under our bank line of credit for the same periods.  Management considers the capital resources to be adequate to meet the current operating needs of the Company for the next twelve months.

GFI is currently operating under a primary $250,000 line of credit with Riverbank, an unaffiliated lender, with an variable interest rate of 5.50%. The line of credit also included a one-half percent origination fee.   Coghlan Family Corporation advanced GFI $175,441.43 and discharged the Riverbank loan on February 1, 2018.

At December 31, 2017, the Company had a $2,500,000 Line of Credit Agreement with the Coghlan Family Corporation (“CFC”) with a balance of $930,000. CFC is an affiliated company controlled by an officer, director and principal beneficial shareholder of the Company. Originally, the interest rate on the line is a variable interest rate equal to the prime rate index (as published in the Wall Street Journal) plus 1%. The line has 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 but is subordinate to the RiverBank line of credit loan agreement. Borrowings under the line are personally guaranteed by an officer of the Company.  Because of the weak economic conditions, effective January 1, 2012, CFC had agreed to (1) extend the due date to January 1, 2016, waive all interest beginning October 1, 2010, (2) waive the 12% default rate, (3) waive the financial covenants and (4) waive the commitment fee. (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 2,500 “post-split” shares of its common stock valued at $5,000 as a loan renewal fee. Effective July 1, 2017, CFC has waived the interest and commitment fee.

In 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.  

On November 13, 2017, the Company entered into a Promissory Note Loan Agreement with Coghlan Family Corporation, a related party (the "Lender").  The Loan Agreement is essentially a revolving line of credit with an initial advance of $25,000 with subsequent advances as requested by the Company.  This indebtedness will survive the proposed Epoint Payment Corp. acquisition transaction.  The loan bears interest at the rate of 6.0% interest and is due and payable on, or before May 15, 2018.  As an inducement to the Lender, the Company agreed to grant one share of post-reverse split common stock for each $2.50 of aggregate principal amount loaned ("Bonus Shares"). The Bonus Shares are due at the loan's maturity date which is May 15, 2018.   At December 31, 2017 the balance was $47,002.

Our capital resources have been adequate to fund our operations at a reasonable level during the year ended December 31, 2017 covered by this Annual Report.  We have paid close attention to our loan portfolio and maintained our funding requirements within our available resources. We receive interest and principal reductions (typically monthly) on loans which we hold in inventory.  We would require an increase in our capital base and an improvement in the real estate markets in order to increase revenue and create profitability.  

For the years ending December 31, 2017 and 2016, our net cash flows used by operating activities were $140,973 and $167,827, respectively.  The reason for decrease for the year ended December 31, 2017 was the sale rental properties.

For the period ended December 31, 2017 and 2016 the cash flows used by investing activities was $121,932 and $138,814, respectively. The reason for the decrease in 2017 compared to 2016 was the Company sold fewer assets in 2017.

For the years ending December 31, 2017 and 2016, our net cash provided by financing activities was $13,617 and $8,351, respectively.  The reason for the increase for the period ended December 31, 2017 resulted from borrowing under a new loan payable.

We consider the terms of the lines of credit to be acceptable. As of December 31, 2017 and 2016, the total combined balances on the lines of credit were and $1,125,000 and $1,130,000, respectively. Interest expense on the lines of credit will fluctuate in future periods with loan reductions. The changes for the lines of credit for the years December 31, 2017 and 2016, were ($5,000) and ($300,000), respectively.

13

On December 15, 2010, the Company entered into a convertible note agreement with John R. Coghlan. The note accrues interest at 8% per annum with interest and balance 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 Dollar 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 is being amortized into earnings over the term of the note. The note is collateralized by 14,500 “post-split” shares of the Company’s Series “B” Preferred Stock. The beneficial conversion feature was based upon the difference between the fair value of the preferred stock into which the note is convertible at the date of issue ($378,750) less the face value of the note ($250,000). The fair value of the preferred stock at the date of issue was calculated based upon the fair value of the shares of common stock (2.5 shares of common stock for each single share of preferred stock or 31,250 “post-split” shares) into which the preferred stock was convertible at the date of issue. 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 12,500 “post-split” shares of Series "B", or 31,250 “post-split” shares of common stock equivalents, at the option of Mr. Coghlan. However, Mr. Coghlan agreed to accept 36,250 “post-split” common shares in lieu of full payment. The 5,000 additional “post-split” common shares represents a financing cost to the Company and as such, financing expense of $29,000 was recognized. (See 8-K filed February 8, 2016)

As discussed in detail in Item 13 concerning related party transactions, we entered into a variety of business transactions with John R. Coghlan, Coghlan Family Corporation, Coghlan, LLC, West 3773 Fifth, LLC and Genesis Finance Corporation.  These transactions served two distinct and different cash generating business purposes.  As a part of the Company's operations, it had sold loan interests from time to time to investors.  Historically, Coghlan, LLC and Coghlan Family Corporation have acted as investors by purchasing loans from the Company.  We believe that these loan sale transactions have been and will be offered to other investors in arms-length type transactions.  Generally, all transactions between the Company and John Coghlan related parties represent transactions designed to generate liquidity for the Company's business operations including note payments to Riverbank.  In the case of these Coghlan related transactions, prior to 2017, Michael Kirk had been solely responsible for setting the transaction values.  In 2017, the board of directors performed this function.

The Company’s principal sources of cash are from loan sales, related party loans, unaffiliated third party loans, funding agreements, rental and lease agreements and common and preferred stock private placements. The Company anticipates that our primary sources of cash are adequate in order to meet the demands upon its current operations, as well as funds to finance ongoing acquisitions of seller financed real estate loans, the originations of commercial real estate hard money loans, the expense of litigating the delinquent loans and the maintenance and resale costs of repossessed properties.

The following table presents cash flow data for the periods indicated.

CASH FLOW DATA:		2017		2016
Net cash used by operating activities	$	(140,973)	$	(167,827)
Net cash provided by (used in) investing activities	$	121,932	$	138,814
Net cash provided by (used in) financing activities	$	13,617	$	8,351

The primary reasons for the changes in cash provided by (used in) operating activities were as follows:

Fiscal year ended December 31,	Increase (decrease)	Primary reason for change
2017	$                     26,854	Prior year impairment and loss on sales of real estate owned and rental property.
2016	$                 (150,903)	Impairment of available for sale security and loss on real estate limited liability company.

The primary reasons for the changes in cash provided by (used in) investing activities were as follows:

Fiscal year ended December 31,	Increase (decrease)	Primary reason for change
2017	$                     (16,882)	Sale of rental property and real estate owned.
2016	$                 212,075	Sale or transfer of our interest in limited liability companies.

14

The primary reasons for the changes in cash provided by (used in) financing activities were as follows:

Fiscal year ended December 31,	Increase (decrease)	Primary reason for change
2017	$                      (5,266)	New loan payable and loan fees
2016	$                      48,642	Decrease in credit line borrowing

Our capital resources have occasionally been strained, but were adequate to support our operations at a reasonable level during the fiscal year covered by this Annual Report. We have paid close attention to our loan portfolio and have managed our cash flow within our available financial resources. We were able to control our funding rate by adjusting our pricing, tightening our underwriting, and/or discontinuing certain product lines. The strains on our capital have been largely caused by increased foreclosure litigation expenses, as well as increased repossession maintenance, holding and resale costs, coupled with lower resale values. We received interest and principal reductions (typically monthly) on loans pending sale, and the interest rate spread between the cost of our lines of credit, or the participation sales to private investors, and our weighted average contract yield provided operating capital which sustained our operations during the reported periods.  We would require an increase in cash, and an improvement in the real estate markets, in order to grow the company, and create profitability.  Until such time as that happens, we believe that cash utilized to grow our asset base will continue to decline in both size and value, and capital resources will remain strained.

OFF-BALANCE SHEET ARRANGEMENTS.

The Company has no off-balance sheet arrangements.

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS.

Please see Note 1 of our consolidated financial statements that describes the impact, if any, from the adoption of Recent Accounting Pronouncements.

ITEM 7A.  Quantitative and Qualitative Disclosure About Market Risk

Not applicable to small reporting companies.

15

ITEM 8.  Financial Statements and Supplementary Data.

802 N Washington

Spokane, WA  99201

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Stockholders of Genesis Financial, Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheet of Genesis Financial, Inc. (the Company) as of December 31, 2017, and the related statements of operations and comprehensive income (loss), stockholders’ equity (deficit), and cash flows for the year ended December 31, 2017, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Fruci & Associates II, PLLC

We have served as the Company’s auditor since 2017.

Spokane, WA

February 14, 2018

16

17

	GENESIS FINANCIAL, INC.
	Balance Sheets
			December 31,		December 31,
			2017		2016
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents	$	5,215	$	10,639
	Interest and other receivables		2,635		16,748
	Investments in real estate limited liability companies		103,584		104,940
	Loans held for sale		306,109		347,755
	Real estate owned		-		14,999
	Total current assets		417,543		495,081
NON-CURRENT ASSETS:
	Long-term investment		212,619		362,619
	Real estate leasehold interest, net of accumulated amortization of $80,848 and $70,527, respectively		93,000		204,423
	Rental property, net of accumulated depreciation of $8,145 and $7,568, respectively		-		121,895
	Office equipment, net of accumulated depreciation of $7,422 and $6,865, respectively		511		1,067
	Total non-current assets		306,130		690,004
Total assets		$	723,673	$	1,185,085
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
CURRENT LIABILITIES:
	Line of credit, affiliated company	$	930,000	$	950,000
	Line of credit, bank		195,000		180,000
	Note payable, affiliated company		47,002		-
	Note payable		-		28,385
	Other current liabilities		10,902		1,115
	Total current liabilities		1,182,904		1,159,500
LONG-TERM LIABILITIES:
	Convertible note payable to officer		-		-
COMMITMENT AND CONTINGENCIES (Notes 5 and 6)			-		-
STOCKHOLDERS’ EQUITY:
	Series B Preferred stock, $1.00 par value; 2,290,000 authorized and none issued and outstanding		-		-
	Common stock, $.001 par value; 100,000,000 authorized, 879,763 and 860,033 issued and outstanding, respectively		880		860
	Additional paid-in capital		8,653,072		8,614,872
	Accumulated deficit		(9,113,183)		(8,590,147)
	Accumulated other comprehensive loss		-		-
	Total stockholders’ equity (deficit)		(459,231)		25,585
Total liabilities and stockholders' equity (deficit)		$	723,673	$	1,185,085

See accompanying notes to financial statements.

18

GENESIS FINANCIAL, INC.
Statements of Operations and Other Comprehensive Income (Loss)
		December 31,
		2017		2016
REVENUE:
Interest (net of write-offs), processing fees and other income	$	36,986	$	59,523
Rental income		11,925		27,500
Total revenues		48,911		87,023
OPERATING EXPENSES:
Fair value adjustments		121,102		168,940
Loss on impairment on long term investment		150,000		-
Bad debt		16,986		42,893
Loss (gain) on rental property		17,329		-
Loss (gain) on real estate limited liability corporations		6,149		(271,238)
Loss on sale of available for sale security		-		497,787
Salaries		36,000		44,750
Interest expense and fees, related party		18,219		22,563
Interest expense, other		10,293		3,984
Financing expense, related party		-		29,000
Depreciation		1,134		3,795
Amortization of rental property		10,321		20,642
Rental property expense		6,302		24,213
Office occupancy and other		178,112		159,725
Total operating expenses		571,947		747,054
NET LOSS		(523,036)		(660,031)
OTHER COMPREHENSIVE INCOME (LOSS):
Reclassification of unrealized loss on available for sale security	$	-	$	497,787
Unrealized loss on available for sale security		-		(24,357)
Total comprehensive income (loss)		-		473,430
COMPREHENSIVE INCOME (LOSS)	$	(523,036)	$	(186,602)
BASIC AND DILUTED LOSS PER SHARE	$	(0.60)	$	(0.78)
WEIGHTED AVERAGE SHARE  OUTSTANDING BASIC AND DILUTED		873,655		848,167

See accompanying notes to financial statements.

19

GENESIS FINANCIAL, INC.
Statements of Cash Flows
				December 31, 2017		December 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss			$	(523,036)	$	(660,031)
Noncash items included in net loss:
	Fair value adjustments			121,102		168,940
	Loss on sale of rental properties			17,329		-
	Write-off of interest and other receivables			16,986		21,506
	Financing expense, related party			-		29,000
	Depreciation and amortization			11,455		24,437
	Common stock issued for note interest and fees			18,219		20,408
	Stock based compensation			20,000		35,988
	Loss (gain) on sale of real estate limited liability companies			6,149		(271,238)
	Loss on sale of available for sale security			-		497,787
	Loss on impairment of long term investments			150,000		-
Changes in assets and liabilities:
	Interest and other receivables			(2,873)		32,655
	Loans held for sale			18,051		(42,893)
	Real estate owned			(4,141)		(12,461)
	Other current liabilities			9,786		(11,925)
		Net cash used in operating activities		(140,973)		(167,827)
CASH FLOWS FROM INVESTING ACTIVITIES:
	Investment in real estate limited liability company			(4,793)		(37,626)
	Proceeds from sale of rental properties			107,585		-
	Proceeds from sale of real estate owned			19,140		-
	Proceeds from sale of real estate limited liability companies			-		174,227
	Proceeds from sale of available for sale security			-		2,213
		Net cash provided (used) by investing activities		121,932		138,814
CASH FLOWS FROM FINANCING ACTIVITIES:
	Borrowing from note payable with affiliate company, net			47,002		-
	Repayment line of credit with affiliated company, net			(20,000)		-
	Repayment of line of credit from bank			(22,500)		-
	Borrowings from line of credit from bank			37,500		10,000
	Repayment of note payable			(28,385)		(1,649)
		Net cash provided by financing activities		13,617		8,351
NET DECREASE IN CASH
	AND CASH EQUIVALENTS			(5,424)		(20,662)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR				10,639		31,301
CASH AND CASH EQUIVALENT, END OF YEAR			$	5,215	$	10,639
SUPPLEMENTAL DISCLOSURE OF CASH FLOW ACTIVITIES:
	Interest paid in cash		$	9,186	$	6,805
NONCASH INVESTING AND FINANCING ACTIVITIES:
	Convertible note payable to officer converted to common stock		$	-	$	250,000
	Loans held for sale converted to REO			-		62,770
	Investment in real estate limited liability company exchanged for reduction of line of credit with affiliated company			-		300,000
	Loans held for sale exchanged for reduction in line of credit with affiliated company			-		10,000
	REO converted to rental property		$	-	$	45,000

See accompanying notes to financial statements.

20

GENESIS FINANCIAL, INC.
Statements of Changes in Stockholders' Equity (Deficit)
For the Years Ended December 31, 2016 and 2017
	Common Stock			Preferred Stock				Additional Paid-in		Accumulated other comprehensive income (loss)		Accumulated
	Shares		Amount	Shares		Amount		Capital				(Deficit)		Total
BALANCES, DECEMBER 31, 2015	809,944		810	-0-		-0-		8,279,527		(473,430)		(7,930,116)		(123,210)
Convertible note converted to stock	36,250		36					278,964						279,000
Common stock issued for services	5,000		5					14,995						15,000
Common stock issued for line of credit interest and fees	8,839		9					20,399						20,408
Compensation expense for stock options								20,988						20,988
Other comprehensive gain										473,430				473,430
Net loss												(660,031)		(660,031)
BALANCES, DECEMBER 31, 2016	860,033	$	860	-0-	$	-0-	$	8,614,873	$	-0-	$	(8,590,147)	$	25,585
Common stock issued for line of credit interest and fees	9,717		10					18,209						18,219
Common stock issued for services	10,000		10					19,990						20,000
20:1 reverse split roundup share	13		0					0						0
Net loss												(523,036)		(523,036)
BALANCES, DECEMBER 31, 2017	879,763	$	880	-0-		-0-		8,653,072		-0-		(9,113,183)		(459,232)

See accompanying notes to financial statements.

21

Genesis Financial, Inc.

Notes to Financial Statements

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, 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 - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Significant estimates used herein include those relating to management’s estimate of fair value of loans held for sales, real estate owned, investments in limited liability companies, stock based compensation, long-term investments and allowance for net operating losses.  It is reasonably possible that actual results could differ from those and other estimates used in preparing these financial statements and such differences could be material.

Cash and cash equivalents – Cash and cash equivalents consist of demand deposits, including interest-bearing accounts, held in a local bank. The Company maintains cash balances in various depository institutions that periodically exceed federally insured limits.  Management periodically evaluates the creditworthiness of such institutions. The Company considers all highly liquid investments purchased, with an original maturity of three months or less, to be a cash equivalent.

Fair value measurements - The following information for each class of assets and liabilities that are measured at fair value is disclosed:

1.

the fair value measurement;

2.

the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3);

3.

for fair value measurements using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following:

a.

total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings, and a description of where those gains or losses included in earnings  are reported in the statement of operations;

b.

the amount of these gains or losses attributable to the change in unrealized gains or losses relating to those assets or liabilities still held at the reporting period date and a description of where those unrealized gains or losses are reported;

c.

purchases, sales, issuances, and settlements (net); and

d.

transfers into and/or out of Level 3.

4.

the amount of the total gains or losses for the period in (3)(a) included in earnings that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date and a description of where those unrealized gains or losses are reported in the statement of operations; and

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.

22

Genesis Financial, Inc.

Notes to Financial Statements

Investments available for sale - The cost of marketable equity securities sold is determined by the specific identification method.  Net unrealized holding gains and losses based upon the fair value of the securities, determined using Level 1 inputs, are reported as other comprehensive income, a separate component of stockholders’ equity. Declines in the fair value of individual available-for-sale securities below their cost that are other than temporary result in a write-down of the individual security to its fair value; write-downs are reflected in earnings. Factors affecting the determination of whether an other-than-temporary impairment has occurred include a significant deterioration in the financial condition of the issuer or that management would not have the intent or ability to hold a security for a period of time sufficient to allow for any anticipated recovery in fair value.

Long term investments – Investments not readily marketable are recorded at cost when purchased. The investments in equity securities of privately held companies in which the Company holds less than 20% voting interest and on which the Company does not have the ability to exercise significant influence are accounted for using the cost method. Under the cost method, these investments are carried at the lower of cost or fair value, determined using Level 3 inputs. The Company recognizes an impairment charge when a decline in the fair value of its investments below the cost basis is judged to be other-than-temporary. In making this determination, the Company reviews several factors to determine whether the losses are other-than-temporary, including but not limited to: (i) the length of time the investment was in an unrealized loss position, (ii) the extent to which fair value was less than cost, (iii) the financial condition and near term prospects of the investment and (iv) the Company's intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in fair value.

Investment in real estate limited liability companies – Investments in real estate companies are recorded as cost when initially acquired. For investment in real estate limited liability companies in which the Company does not have joint control or significant influence, the cost method is used. Under the cost method, these investments are carried at the lower of cost or fair value. For investment in real estate companies in which there is joint control between the parties, the equity method is utilized whereby the Company’s share of the underlying real estate limited liability companies’ earnings and losses is included in the statement of operations. For investments in real estate limited liability companies where the Company holds more than 50% of the voting interest and has significant influence, company is consolidated with the presentation of non-controlling interest if material to the financial statements.  Otherwise, the investment is presented similar to the equity method whereby the Company’s share of the underlying earnings and losses is included in the statement of operations.   In determining whether significant influence exists, the Company considers its participation in policy-making decisions and its representation on the company’s board of directors. The Company recognizes an impairment charge when a decline in the fair value of its investments below the carrying amount is judged to be other-than-temporary.

Real estate leasehold interest and rental properties – Leasehold interests in real estate and rental properties are stated at cost unless circumstances indicate that cost cannot be recovered, in which case, an adjustment to the carrying value of the property is made to reduce it to its estimated fair value. Costs clearly associated with the development of the leasehold interest and rental properties are capitalized. Amortization expense is recognized over the term of the leasehold interest and over 39 years for rental properties. Income received on the interests and rental properties is recognized in the period earned.

Loans held for sale – Loans held for sale are initially recorded at the lower of cost or fair value.  Loans held for sale are measured at fair value on a recurring basis.   Fair value for these loans is determined by assessing the probability of borrower default using historical payment performance and available cash flows to the borrower, then projecting the amount and timing of cash flows, including collateral liquidation if repayment weaknesses exist.  The Company considers any valuation inputs related to loans held for sale to be Level 3 inputs. Interest on loans held for sale is included in interest income during the period held for sale. Typically, the Company attempts to sell loans three to twelve months after acquisition. It is the policy of the Company not to hold any loans for investment purposes.  

Real estate owned – Real estate owned (“REO”) (acquired through a loan default) is recorded at fair value on a non-recurring basis.  Upon transfer of a loan held for sale to REO, properties are recorded at amounts which are equal to fair value of the properties based on the following inputs: (1) appraisal provided by a certified appraiser, (2) BPO (Broker’s Pricing Opinion) provided by a qualified real estate broker, (3) site inspection by qualified management of the Company, or (4) a combination of all of the above.  Periodically, non-recurring fair value adjustments to REO are recorded to reflect partial write-downs based on the same inputs.  The Company considers any valuation inputs related to REO to be Level 3 inputs.  The individual carrying values of these assets are reviewed for impairment at least annually and any additional impairment charges are expensed to operations.

Loan sales – Loans are considered sold when the Company surrenders control over the loan to the investors, with standard representations and warranties, and when the risks and rewards inherent in owning the loans have been transferred to the buyer.

Income tax – Deferred taxes are provided on the liability method whereby deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences.  Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets, subject to a valuation allowance, are recognized for future benefits of net operating losses being carried forward.

23

Genesis Financial, Inc.

Notes to Financial Statements

Earnings per share – Basic earnings per common share have been computed on the basis of the weighted-average number of common shares outstanding during the period presented.  Diluted earnings per common share are computed on the basis of the number of shares that are currently outstanding plus the number of shares that would be issued pursuant to outstanding warrants and stock options unless such shares are deemed to be anti-dilutive.  The dilutive effect of outstanding securities, in periods of future income, would be as follows as of December 31, 2017 and December 31, 2016:

	December 31,
	2017	2016
Stock options	-0-	-0-
Convertible debt	-0-	-0-
Total possible dilution	-0-	-0-

Share-Based Compensation – The Company periodically issues common shares or options to purchase shares of the Company’s common shares to its officers, directors or other parties.  These issuances are valued at fair value.  The Company uses a Black Scholes valuation model for determining fair value of options, and compensation expense is recognized ratably over the vesting periods on a straight line basis.  Compensation expenses for grants that vest upon issue are recognized in the period of grant.

New Accounting Pronouncements – Accounting Standard Update (ASU) 2014-09, Revenue from Contracts with Customers creates a new, principal-based revenue recognition framework that will affect nearly every revue-generating entity. The guidance in ASU 2014-09 is effective for public entities for annual reporting periods beginning after December 15, 2016. Management has not determined the effect, if any; this new standard will have on its financial statements.

Accounting Standard Update (ASU) 2016-02 Leases (Topic 842) modifies the classification criteria and requires lessees to recognize the assets and liabilities on the balance sheet for most leases.  The update is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. Management has not determined the effect, if any; this new standard will have on its financial statements.

Accounting Standard Update (ASU) 2016-15 Statement of Cash Flows (Topic 230):  Classification of Certain Cash Receipts and Cash Payments provides guidance on classification for cash receipts and payments related to eight specific issues.  The update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. We do not expect this update to have a material impact on our financial statements.

Accounting Standard Update (ASU) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments changes how entities will measure and disclose credit losses for most financial assets and certain other instruments that are not measured at fair value through net income and replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information in determining credit loss estimates. ASU 2016-13 also requires enhanced disclosures. ASU 2016-13 is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for all entities for annual periods beginning after December 15, 2018. The Company is currently evaluating the potential effect of this ASU.

Reclassifications – Certain reclassifications have been made to conform prior periods’ data to the current presentation. These reclassifications have no effect on the results of reported operations or stockholders’ equity.

NOTE 2 — LOANS HELD FOR SALE

The Company's fair value of loans held for sale consisted of the following:

		December 31, 2017		December 31, 2016
Residential	$	79,425	$	120,912
Commercial		226,684		226,843
Other		-
Total	$	306,109	$	347,755

24

Genesis Financial, Inc.

Notes to Financial Statements

The following table presents a reconciliation of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the years ended December 31, 2017 and 2016:

		Years Ended December 31,
		2017		2016
Beginning Balance	$	347,755	$	503,890
New loans		-		206,079
Principal payments, collections		(21,977)		(167,211)
Loan losses		-		(42,893)
Converted to REO		-		(62,770)
Loan exchanged for reduction of line of credit		-		(10,000)
Fair value adjustments		(20,000)		(146,258)
Repossession expenses		331		66,918
Ending Balance	$	306,109	$	347,755

NOTE 3- REAL ESTATE OWNED

The Company's fair value of REO consisted of the following:

		December 31,  2017		December 31, 2016
Land	$	-	$	14,999
Commercial		-		-
Total	$	-	$	14,999

The following table presents the change in balance sheet carrying values associated with REO for the years ended December 31, 2016 and 2015:

		Years Ended December 31,
		2017		2016
Beginning Balance	$	14,999	$	27,451
Proceeds from sales of REO		(19,140)		(2,704)
Fair value adjustments		-		(22,682)
Net change in holding costs		-		(4,836)
Transferred from loans held for sale		-		62,770
REO converted to rental property		-		(45,000)
Gain on sale of REO		4,141
Ending Balance	$	-0-	$	14,999

NOTE 4 — OTHER ASSETS

Long term investments:

Flyback Energy, Inc.:

On November 23, 2010, the Company closed the purchase of an equity interest in Flyback Energy, Inc., for $1,200,000.  The purchase was for $1,200,000 of Series “B” Preferred Stock and Common Stock Purchase Warrants from Flyback Energy, Inc., a closely held Washington corporation payable on an installment basis.  On April 25, 2011, the Company purchased 85,274 shares of Series “C” Preferred Stock for $50,000 which is convertible at $0.60 per share and bears a 5% dividend rate.

The Flyback Series "B" Preferred shares are convertible into Flyback common shares on a one for one (1:1) basis and the conversion pricing is subject to adjustments for certain diluting issues of common stock, subdivisions or combinations of common stock, reclassifications, exchanges and/or substitutions of stock.

25

Genesis Financial, Inc.

Notes to Financial Statements

Flyback Energy, Inc. is a privately-held company that has developed a unique and proprietary electronic switch design that offers control over electrical power and magnetic fields.

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 charge 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.  

Digi Outdoor Media, Inc.:

In 2014, the Company loaned Placer Creek Mining Company (“Placer”) $150,000. The loan interest rate was 5.0% and the Company has an option to convert any or all of the amount due into an equity private placement of Placer. The Placer transaction was a related party transaction. (see Note 11: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.   

On December 31, 2017, the Company due to legal action concerning Digi Outdoor Media booked an impairment charge of $150,000 to reduce the carrying value to $-0-.

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 11) for $0.0003 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, on behalf of itself and note interest holders, through collateralized loan foreclosures, acquired two real property interests, one in Pennsylvania and the other in Washington.  The Company formed two Washington limited liability companies, 21 Bay Street, LLC and Wenatchee Riverview, LLC for the purpose of holding these multiple property interests.  The Company's collective interests were valued at $225,000.  

In 2013, the Company, on behalf of itself and note interest holders, through collateralized loan foreclosure, acquired a real property interest in Hermiston, Oregon.  The Company formed Hermiston 353, LLC to hold the property.  The Company's 12.9% interest was valued at $51,600.   

In 2014, the Company, on behalf of itself and note interest holders, through collateralized loan foreclosure, acquired a real property interest in Pennsylvania.  The Company formed Tioga, LLC to hold the property.  The Company's 31.95% interest was valued at $47,925.   

These companies are 100% controlled and managed by John Coghlan, related party. (see Note 11)

The investments are accounted for using the equity method.  During the years ended December 31, 2017 and 2016, the Company recorded loss (income) of $6,149 and ($271,238), respectively, which represent realized sales of interest and its portion of the real estate company’s loss (income) for the same periods. During the years ended December 31, 2017 and 2016, the Company advanced $4,793 and $37,626 for property taxes and interest owingon the underlying real estate owned by these limited liability companies.

26

Genesis Financial, Inc.

Notes to Financial Statements

During the year ended December 31, 2016, Wenatchee Riverview, LLC 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 11) for $300,000, resulting in a gain on sale of real estate limited liability company of $131,417. 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, and is accounting for the company’s carrying value of $85,534 as a rental property. The property, being operated as Duffy's Bar, was subsequently leased on a three year lease agreement for $1,500 per month. During the years ended December 31, 2017 and 2016, the company recognized $3,000 and $18,000 per year in rental income.   This is a commercial building being depreciated over thirty-nine (39) years. For the years ended December 31, 2017 and 2016, the company recorded depreciation of $-0- and $2,143. On March 8, 2017, by board action the Company sold this property to Coghlan Family Corporation (see Note 11) for $77,585, resulting in a gain on sale of $342. The purpose of the sale was to generate working capital for the Company.

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 India restaurant. The property was placed into real estate owned during the quarter 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 less a $400 monthly credit toward the option price. During the year ended December 31, 2017 and 2016 the company recognized $8,925 and $2,175 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. In July the Company sent out a notice of default and decided to sell the interest to a related party. On July 17, 2017, by board action, the Company sold a commercial rental property to Coghlan Family Corporation (see Note 11) for $30,000 resulting in a loss of ($17,670), respectively.

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 11). The Company recorded amortization of $-0- and $20,642 for the years ended December 31, 2017 and 2016, respectively. The Company had 0 and 13 lots leased and had rental income of $-0- and $7,325 the years ended December 31, 2017 and 2016, 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, 2017, the Company decided to adjust the carrying value of the property to a fair value estimated of $93,000, based on management’s estimate of discounted cash flows received from the property.

NOTE 5 — LINES OF CREDIT

GFI has renewed a $250,000 line of credit with Riverbank. At December 31, 2017 and 2016 the balance owing is $195,000 and $180,000, respectively. The line of credit had a term of twelve months, and an origination fee of 1/2%, or $1,250. Accrued interest is paid monthly. The Riverbank line of credit is senior to the Coghlan Family Corporation, Inc. (“CFC”) line of credit and is collateralized by the assets of GFI. On December 7, 2016 the line of credit was extended to February 1, 2018, 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. At December 31, 2017 the interest rate was 5.50%. The Riverbank line prohibits the CFC line from being paid down below the amount owed to Riverbank during the loan term.  The line is payable on demand and is personally guaranteed by John R. and Wendy B. Coghlan, related parties of the Company.

27

Genesis Financial, Inc.

Notes to Financial Statements

The Company has a $2,500,000 Warehouse Line of Credit Promissory Note Agreement with the CFC. At December 31, 2017 and December 31, 2016 the balance owing was $930,000 and $950,000, respectively. CFC is an affiliated company controlled by John R. Coghlan and Wendy B. 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. 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.

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. In addition, the Company issued 50,000 shares of its common stock valued at $5,000 as a loan renewal fee. Effective July 1, 2017 CFC agreed to waive the interest and origination fees until December 31, 2017, or earlier if the Epoint Capital Stock Exchange Agreement fails to close.  

In 2016, the Company, by board action authorization, exchanged two assets for a $310,000 principal reduction in the CFC Warehouse Line of Credit. The Company (1) exchanged a loan held for sale with a cost basis of $10,000 and (2) exchanged its 9.1756% interest in a limited liability company valued at $300,000.  

For the year ended December 31, 2017 and December 31, 2016 the Company had issued 9,717 shares and 6,339 shares, respectively, of the Company common stock for a value of $18,219 and $15,407 in interest, respectively.

NOTE 6 — NOTES PAYABLE

Convertible Note Payable to Officer:

On December 15, 2010, the Company entered into a convertible note agreement for $250,000 with John R. Coghlan, a related party (see Note 11). The note accrued interest at eight (8%) percent per annum with interest and balance initially due on December 15, 2012.  The note was 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. The note was collateralized by 14,500 shares of the Company’s Series “B” Preferred stock. On October 16, 2012, the Company and Coghlan agreed to extend the due date of the note to December 15, 2016.

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 12,500 “post-split” shares of Series "B", or 31,250 “post-split” shares of common stock equivalents, at the option of Mr. Coghlan. However, Mr. Coghlan agreed to accept 36,250 “post-split” common shares in lieu of full payment. The 5,000 additional “post-split” common shares represents a financing cost to the Company and as such, financing expense of $29,000 was recognized for the year ended December 31, 2016.  The value was calculated by using the market price on the date of conversion.  

Note Payable:

In 2013, the Company assumed a note payable totaling $62,699 relating to a loan it had made in 2005.   When the Company funded the loan in 2005, it sold 100% of its interest to various investors. During 2013, the Company began foreclosure proceedings on behalf of the investors because the borrower was delinquent on payments. During the proceedings, it was determined that the Company had failed to obtain first position in the underlying property and that a separate creditor was in first position. To uphold its agreement with the investors, the Company assumed the balance of the note with the creditor and recognized a loss for the entire amount in 2013. The term of the assumed note is 9.5% until paid in full and monthly payments are $832. On August 30, 2017, the Company paid the note in full.  At December 31, 2016 and 2017, the balance owing was $28,385 and $-0-, respectively.

Note Payable, related party:

On November 13, 2017, the Company entered into a Promissory Note Loan Agreement with Coghlan Family Corporation, a related party (the "Lender").  The Loan Agreement is essentially a revolving line of credit with an initial advance of $25,000 with subsequent advances as requested by the Company.  This indebtedness will survive the proposed Epoint Payment Corp. acquisition transaction.  The loan bears interest at the rate of 6.0% interest and is due and payable on, or before May 15, 2018.  As an inducement to the Lender, the Company agreed to grant one share of post-reverse split common stock for each $2.50 of aggregate principal amount loaned ("Bonus Shares"). The Bonus Shares are not due until the loan's maturity date which is May 15, 2018.  At December 31, 2017 the balance was $47,002.

28

Genesis Financial, Inc.

Notes to Financial Statements

NOTE 7 — EQUITY

Series B Preferred Stock

On November 11, 2010 the Company filed Articles of Amendment to the Amended and Restated Articles of Incorporation creating 2,290,000 “pre-split” shares of Series B Preferred Stock.  The designated Series B Preferred Stock consists of 2,290,000 “pre-split” shares with a par value $1.00; is non-dividend bearing, convertible to Common Stock at $.40 per share subject to any recapitalization. The holders of the Preferred Stock will be entitled to receive, prior and in preference to any Distributions of any assets of the Corporation to the holders of the Common Stock.  Each share of the Preferred Stock is convertible into two and one-half common stock shares at the option of the holder.  Each share of Series B Preferred Stock can automatically converted immediately prior to the closing of a firm commitment underwritten initial public offering pursuant to an effective registration statement filed under the Securities Act of 1933 or upon the receipt by the Corporation of a written request for such request for such conversion from the holders of the majority of the Series B Preferred Stock holders.

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 “pre-split” shares of Series B Preferred were converted into 4,123,750 “pre-split” common shares.   

As of December 31, 2017 no shares of Series B convertible Preferred stock are issued and outstanding.

Common Stock

Effective August 1, 2016 the terms of the amended Warehouse Line of Credit changed to issuing stock for the interest due on the line of credit monthly. For the year ended December 31, 2016, 6,339 “post-split” shares of common stock were issued for interest and 2,500 “post-split” shares of common stock were issued for renewal fee for a value of $20,407, respectively. For the year ended December 31, 2017, 9,717 “post-split” shares of common stock were issued for interest for a value of $18,219, respectively.  As of July 1, 2017 the interest and fee have been waived. (See Note 5)

On April 19, 2017, the Company issued 10,000 shares of common stock as director compensation valued at Two Dollars per share.

On December 12, 2017, the Company implemented a twenty for one (20:1) reverse stock split. This reverse split resulted in reducing the common stock in the amount of 16,715 as of December 31, 2017 with an offsetting increase to additional paid-in capital.

NOTE 8 - STOCK OPTIONS

On April 10, 2002, the Board of Directors approved the Genesis Financial, Inc. Stock Option Plan (the Plan), and the Plan was subsequently approved by the Shareholders of the Company on May 2, 2002.  The plan allows for issuance of Incentive Stock Options (ISOs) and Non-statutory Stock Options (NSOs).  The maximum number of shares that may be subject to option and exercised under the Plan is 65,000 “post-split” shares.  The ISOs and NSOs expire 30 days after the recipient ceases to be an employee for the Company or one year after the recipient’s death. No options are available for future grants under the plan.  No options were issued or exercised in 2017 or 2016.

Compensation expense relating to stock options granted was $-0- and $20,988 during the years ended December 31, 2017 and 2016, respectively, and is classified as ‘office occupancy and other expenses’.

On November 21, 2016, the outstanding stock options were terminated by all holders, the value of the remaining stock options were determined to be immaterial.  

Transactions concerning stock options pursuant to our stock option plans are summarized as follows:

	Shares Subject to Options	Weighted Average Exercise Price	Weighted Average Remaining Term
Outstanding at December 31, 2015	261,000	$0.28	2.9 years
Terminated, November 21, 2016	(261,000)	-
Outstanding at December 31, 2017 and 2016	-0-	$0.0	0 years
Exercisable at December 31, 2017 and 2016	-0-	$0.0

29

Genesis Financial, Inc.

Notes to Financial Statements

NOTE 9 – INCOME TAX:

Components of the Company’s deferred income tax assets are as follows:  

	December 31,
	2017	2016
Net operating loss carry forward	$               1,207,000	$            1,099,000
Fair value adjustment	1,104,000	1,045,000
Capital loss not deductible	31,500-	194,000
Stock-based compensation	97,000	90,000
Reserves	77,500	-0-
PPE/Impairment	436,000	389,000
Deferred tax asset	2,953,000	2,817,000
Less valuation allowance	(2,953,000)	(2,817,000)
Net deferred tax asset	$                            0	$                         0

Tax Rate Reconciliation are as follows:

	2017		2016
Book income (loss) at statutory rate	$  (183,000)	-35.00%	$  (231,000)	-35.00%
Effect of state taxes	(21,000)	-4.00%	(29,000)	-4.40%
Increase in valuation allowance	204,000	39.00%	260,000	39.40%
	$             (0)	(0)	$             (0)	(0)

The deferred tax assets were calculated assuming a 21% tax rate at December 31, 2017 and December 31, 2016.  

The federal tax rates changed from 35% to 21%, resulting in a decrease in deferred taxes and related valuation allowance as of 12/31/16 and 12/31/17 in the amount of 676,000 and 744,000, respectively

At December 31, 2017, the Company had a federal net operating loss carry forward available for income tax purposes of approximately $5,100,000 expiring over the years 2029 through 2035. Because management does not believe it is more likely than not that the carry forward will be utilized, the deferred tax assets have been fully reserved.

The Company has analyzed its filing positions in all jurisdictions where it is required to file income tax returns and have recognized that certain tax positions taken in the 2014 through 2017 years could result in adjustments to the fair value adjustments for tax purposes.  However, these adjustments would not result in a tax provision as they would result in revisions to the net operating loss carryforward amount.

Management has determined that the Company is subject to examination of income tax filings in the United States for the 2014 through 2017 tax years. In the event that the Company is assessed penalties and/or interest, penalties will be charged to other operating expense and interest will be charged to interest expense.

NOTE 10 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying values of cash and cash equivalents and lines of credit approximate fair value. The carrying values of the convertible note payable to officer and note payable approximate fair market value as it is based on market rates of interest. The fair value of the long-term investment at December 31, 2017 is approximately $213,000 based upon management’s estimate of the fair value of the common stock of the underlying investment.

The following table sets forth the Company’s financial assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy.  Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

30

Genesis Financial, Inc.

Notes to Financial Statements

		Fair value at December 31, 2016
		Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	10,639	$	10,639	$	-	$	-
Loans held for sale		347,755		-		-		347,755

		Fair value at December 31, 2017
		Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	5,215	$	5,215	$	-	$	-
Loans held for sale		306,109		-		-		306,109

The Company’s cash and cash equivalent instruments are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices.  

The Company’s available for sale investments were valued using quoted market prices, and accordingly, is included in Level 1.

The fair value of the Company’s loans held for sale is determined by assessing the probability of borrower default using historical payment performance and available cash flows to the borrower, then projecting the amount and timing of cash flows, including collateral liquidation if repayment weaknesses exist.  The Company considers any valuation inputs related to loans held for sale to be Level 3 inputs.  See changes in the fair value of this Level 3 valuation in Note 2.

NOTE 11— 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 B. 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 former 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. As of January 1, 2012 the management fee was removed and the outsourcing services were offset by general offices expenses paid by the Company on behalf of Genesis Finance Corporation. 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 4, 5 and 6, Genesis Financial, Inc. had the following related party transactions for the year ended December 31, 2017 and 2016.

John R. Coghlan

As of December 31, 2017, the Company continues a managing agreement for the investment in real estate limited liability companies. The agreements are stated in the operating agreement of each limited liability companies.

On December 7, 2017, John R. Coghlan personally guaranteed our Riverbank line of credit.

On November 13, 2017, John R. Coghlan resigned as Chief Executive Officer and President of the Company.

On April 19, 2017, the Company issued 2,500 “post-split” shares of common stock for as director compensation valued at Two Dollars per share.

On November 21, 2016, John R. Coghlan terminated his stock options agreement with the Company.

31

Genesis Financial, Inc.

Notes to Financial Statements

On November 2, 2016, John R. Coghlan purchased 15,767 “post-split” common shares of Genesis Financial, Inc. from Michael Kirk, a former officer of the company.

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.

On February 8, 2016, John R. Coghlan converted his $250,000 note for 36,250 “post-split” shares of common stock. The note was originally convertible into 12,500 “post-split” shares of Series "B", or 31,250 “post-split” shares of common stock equivalents, at the option of Mr. Coghlan. However, Mr. Coghlan agreed to accept 36,250 “post-split” common shares in lieu of full payment. The 5,000 “post-split” additional common shares represent a financing cost to the Company and as such, financing expense of $29,000 was recognized in the year ended December 31, 2016. (see Note 6)

Coghlan Family Corporation “CFC”

On February 6, 2018, Coghlan Family Corporation entered into a Debt Forgiveness Agreement with Genesis Financial, Inc. and forgave the sum of $441,080.

On February 1, 2018, Coghlan Family Corporation advanced Genesis Financial, Inc. the sum of $175,441.43 by paying off the Riverbank loan balance in full.  

On November 13, 2017, the Company entered into a Promissory Note Loan Agreement with Coghlan Family Corporation, a related party (the "Lender").  The Loan Agreement is essentially a revolving line of credit with an initial advance of $25,000 with subsequent advances as requested by the Company.  This indebtedness will survive the proposed Epoint Payment Corp. acquisition transaction.  The loan bears interest at the rate of 6.0% interest and is due and payable on, or before May 15, 2018.  As an inducement to the Lender, the Company agreed to grant one share of post-reverse split common stock for each $2.50 of aggregate principal amount loaned ("Bonus Shares"). The Bonus Shares are due at the loan's maturity date which is May 15, 2018.   At December 31, 2017 the balance was $47,002. (see Note 6)

July 17, 2017, by board action the Company sold a rental property for $30,000, resulting in a loss of ($17,670).

March 8, 2017, by board action the Company sold a rental property for $77,585, resulting in a gain on sale of $342. The Company also sold two REO with a basis of $14,999 for $19,140 for a gain of $4,141.

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 $131,417 was realized by the Company.

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.

Effective August 1, 2016 the terms of the amended Warehouse Line of Credit changed to issuing stock for the interest due on the line of credit monthly. The table below shows the issue dates, number of shares issued and amount of interest being paid. As of July 1, 2017 interest is waived. (see Note 5)

Issue date	Shares Issued “post-split”	Interest Amount
June 30, 2017	1,887	$3,019
May 31, 2017	1,952	$3,123
April 30, 2017	1,887	$3,019
March 31, 2017	1,952	$3,123
February 28, 2017	1,171	$2,811
January 31, 2017	868	$3,123
1st & 2nd Quarter 2017 Totals	9,717	$18,219
December 31, 2016	868	$3,123
November 30, 2016	839	$3,019
October 31, 2016	1,562	$3,123
September 30, 2016	1,509	$3,019
August 31, 2016	1,562	$3,123
2016 Total	6,339	$15,407

32

Genesis Financial, Inc.

Notes to Financial Statements

On August 1, 2016, CFC amended the Warehouse Line of Credit and 2,500 “post-split” shares of common stock were issued. (See Note 5)

Coghlan, LLC

There was no activity for the years ending December 31, 2017 and 2016.

JC Housing, LLC

There was no activity for the year ended December 31, 2017 and 2016.

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 December 31, 2017, the Company continued a month-to-month tenancy with West 3773 Fifth, LLC, a company owned and controlled by John and Wendy Coghlan. The monthly rent is $1,250. Other office expenses are shared by all of the tenants of which the Company’s portion is estimated at $2,500 per month.

Genesis Finance Corporation “GFC”

As of December 31, 2017, the Company continues a managing agreement for the investment in real estate limited liability companies. The agreements are stated in the operating agreement of each limited liability companies.

Michael Lavigne

On November 10, 2017, Michael Lavigne resigned as Executive Secretary and Director of the Company.

On April 19, 2017, the Company issued 2,500 “post-split” shares of common stock as director compensation valued at Two Dollars per share.

On March 1, 2017, the Board of Directors appointed Michael Lavigne to hold the Executive Officer position of Secretary and Company Director.

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

On April 19, 2017, the Company issued 2,500 “post-split” shares of common stock as director compensation valued at Two Dollars per share.

There was no activity for the year ended December 31, 2016.

For the year ended December 31, 2015, the Company purchased two travel trailers from JC Housing, LLC for $30,000, which Mr.  Lohman has a 33% interest in.

NOTE 12— SUBSEQUENT EVENTS

Genesis Financial Riverbank Loan:

On February 1, 2018, Coghlan Family Corporation advanced Genesis Financial, Inc. the sum of $175,441.43 by paying off the Riverbank loan balance in full.  

Coghlan Family Corporation Warehouse Line of Credit:

On February 6, 2018, Coghlan Family Corporation entered into a Debt Forgiveness Agreement with Genesis Financial, Inc. and forgave the sum of $441,080.

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ITEM 9.  Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.

We have had no disagreements on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures with any of our accountants for the years ended December 31, 2017 and 2016, or any interim periods.  We have not had any other changes in, nor have we had a disagreement, whether or not resolved, with our accountants on accounting and financial disclosures during our recent fiscal year or any later interim period.

ITEM 9A.  Controls and Procedures.

Disclosure Controls and Procedures

Under the supervision and with the participation of our senior management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of the end of the period covered by this Annual Report on Form 10-K (the "Evaluation Date").  Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded as of the Evaluation Date that our disclosure controls and procedures were not effective such that the information relating to us required to be disclosed in our Securities and Exchange Commission ("SEC") reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Evaluation of and Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting.  Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.  With the participation of our Chief Executive and Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2017 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control – (2013) Integrated Framework.  Based upon such evaluation, our management concluded that we did not maintain effective internal control over financial reporting as of December 31, 2017 based on the COSO framework criteria, as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.

The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee, (2) lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (3) inadequate segregation of duties consistent with control objectives; and (4) management dominated by a single individual without adequate compensating controls. The aforementioned material weaknesses were identified by our Chief Executive and Financial Officer in connection with the review of our financial statements as of December 31, 2017.

Management believes that the material weaknesses set forth above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

This Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to an exemption for non-accelerated filers from the internal control audit requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the period ended December 31, 2017 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

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Limitations

Our management, including our Chief Executive Officer and Principal Financial Officer (Chairman of the Board), does not expect that our disclosure controls or internal controls over financial reporting will prevent all errors or all instances of fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to its costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and any design may not succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitation of a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

ITEM 9B.  Other Information.

None.

PART III

ITEM 10.  Directors, Executive Officers and Corporate Governance

Director Independence

The Board has determined that we do not have a majority of independent directors as that term is defined under Rule 4200(a) (15) of the NASDAQ Marketplace Rules, even though such definition does not currently apply to us, because we are not listed on NASDAQ.

The following sets forth information concerning our Management and key personnel:

DIRECTORS AND EXECUTIVE OFFICERS

As of December 31, 2017, the Directors and Executive officers were as follows:

Name	Age	Position	Term of Office
Roy Rose	59	President, CEO, Director	11/10/17-Present
John R. Coghlan	75	CFO, Chairman of the Board, Director	01/02/06-Present
Virginia Walters	44	Secretary*, Treasurer,  Director	10/20/11-Present
Clint Lohman	55	Director	10/22/13-Present

* Ms. Walters became Secretary on November 13, 2017.

As of December 31, 2017, GFI operated with three Executive Officers and a four member Board of Directors. The following are brief biographical descriptions of the current Executive Officers and Directors of GFI.

ROY ROSE, Chief Executive Officer, President, Director, age 59.  Mr. Rose joined the Company on November 10, 2017.  He has over thirty years of experience in the private equity market as a financial professional.  His experience includes leadership and expertise structuring and investing in leveraged buyouts, real estate, mergers and management buyouts since 1985. Mr. Rose is the Chief Executive Officer of Whitestone Investment Network, located in Lake Oswego, Oregon since 2014.  Whitestone identifies small and mid-cap companies in which it can accumulate equity interests helping those companies improve shareholder equity.  During 2013, Mr. Rose was an independent financial consultant.  From 2009 to 2011 he was the cofounder, business development of Patron Company.  From 2011-2012 he was the Chief Executive Officer of Patron Company. Patron was an online retail enterprise which provided funding to schools K-12.  We believe that Mr. Rose's business skills and attributes qualify him to be a member of the Company's board of directors.

35

JOHN R. COGHLAN, Chief Financial Officer, Director and Chairman of the Board, age 75.  Mr. Coghlan became a Director on January 2, 2006. Mr. Coghlan is a retired C.P.A. Mr. Coghlan became responsible for the overall management of operations on January 1, 2010. Prior to that time, he acted in an advisory capacity to the Board of Directors. Mr. Coghlan graduated from the University of Montana with a degree in Business Administration and has held the designation of Certified Public Accountant since 1966.  Mr. Coghlan was a founder of Labor Ready, Inc., a New York Stock Exchange traded company, and served as Chief Financial Officer and Director of Labor Ready from 1987 through 1996, when he retired.  Since his retirement, the Coghlan Family Corporation, a privately held family business that manages family investment accounts, has employed Mr. Coghlan.  Coghlan Family Corporation is 100% owned by the Coghlan Family LLC.  John and Wendy Coghlan, husband and wife, own minority interests in Coghlan, LLC and control both the LLC and the Corporation through the LLC management agreement.  The remaining interests in the Coghlan, LLC are owned by Mr. Coghlan’s children and grandchildren.

VIRGINIA WALTERS, Secretary, Treasurer and Director, age 44. For the past six years, Ms. Walters has been an employee of Genesis Financial, Inc. She has acted in a variety of roles, including, accounting manager and custodian of the corporate records. Her role has included assisting company president and board of directors in the preparation of internal reports relating to the company’s real estate loans investment business. Ms. Walter’s skills and attributes demonstrated in these positions over the past six years qualify her for promotion to the office of Secretary, Treasurer and as a member of the board of directors.

CLINT LOHMAN, Director, age 55. Since 2000, Mr. Lohman has resided in Bozeman, Montana, where he owns and operates Rocky Mountain Gaming.  Moreover Mr. Lohman has ownership in several businesses represented within Eastern Montana and Western North Dakota.  Mr. Lohman has developed and maintains close relationships with farmers, business people and long-standing residents in the Williston Basin.  The combination of Mr. Lohman’s business expertise and relationships specific to the Williston Basin provides the Company with significant advantages in conducting business operations in Montana – North Dakota area.  Mr. Lohman attended and graduated from North Dakota College of Science.  Mr. Lohman's wide range of business skills and attributes qualify him as a member of our Company's board of directors.

Involvement in Certain Legal Proceedings

To the Company's knowledge, none of the events described in Item 401(f) have occurred during the past ten (10) years and that are material to an evaluation of the ability or integrity of any director, person nominated to become a director or executive officer of the Company.

TRANSACTIONS WITH AFFILIATES AND CONFLICTS OF INTEREST.

In all transactions between the Company and an affiliated party, the transaction will be presented to the Board of Directors and may only be approved if (1) if the transaction is on terms that are no less favorable to the Company than those that can be obtained from unaffiliated third parties and, (2) all of the directors who do not have an interest in the transaction must unanimously approve of the action. We will pay for legal counsel to the independent directors if they want to consult with counsel on the matter. We believe that the requirement for approval of affiliated transactions by disinterested independent directors will assure that all activities of the Company are in the best interest of the Company and its shareholders.

We intend to consider investment in other businesses from time to time. When presented with an investment opportunity, we may decline the investment because of the timing, other commitments, size, suitability standards, or any number of other sound business reasons. In such circumstances, it is possible that some or all of our officers and directors may choose to make the investment from personal funds. In order to fulfill their fiduciary responsibilities to the Company and our shareholders, each officer and director is aware that he or she must make business opportunities that are consistent with our business plan available to the company first. If we decline to participate, the individual officers and directors may then participate individually. Beyond the obligation to present opportunities to the Company first, there are no restrictions on participation in business opportunities by our officers and directors.

CODE OF ETHICAL CONDUCT

Our board of directors adopted our Code of Ethical Conduct which applies to all of our employees and directors, including our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions.  We believe the adoption of our Code of Ethical Conduct is consistent with the requirements of the Sarbanes-Oxley Act of 2002.

ITEM 11.  Executive Compensation

Compensation Discussion and Analysis

Compensation expenses for 2017 and 2016 were $36,000 and $44,750, respectively.

36

The following table set forth the compensation information on executive officers Roy Rose, John Coghlan and Virginia Walters for the fiscal years ending December 31, 2017 and 2016.

Name and Principal Position	Years	Salary ($)	Bonus  ($)	Stock Awards ($)	Options Awards ($)(1)	Non-Equity Incentive Comp  ($)	All Other Compensation ($)	Totals
Roy Rose	2017	$      -0-	-0-	-0-	-0-	-0-	-0-	$      -0-
John Coghlan	2016	$      -0-	-0-	-0-	-0-	-0-	-0-	$      -0-
President	2017	$      -0-	-0-	-0-	-0-	-0-	-0-	$      -0-
Virginia Walters	2016	$44,750	-0-	-0-	-0-	-0-	-0-	$44,750
Secretary	2017	$36,000	-0-	-0-	-0-	-0-	-0-	$36,000

(1)

Represents vesting value of outstanding options during each fiscal year. Options were terminated November 21, 2016.

Our board of directors has responsibility for approving the compensation arrangements for our executives.  We do not have a standing compensation committee so our board acts in the capacity of a compensation committee. The principal responsibilities of the board of directors in the area of compensation are to establish policies and periodically determine matters involving executive compensation, recommend changes in employee benefit programs, grant or recommend the grant of stock options and stock awards under our individual compensation agreements with employees and provide counsel regarding key personnel selection.

GFI has no employment agreements in place with any employee, including executive officers.  All employment is “at will”.

Director fees for 2017 and 2016 were $20,000 and $-0-, respectively.

The following table set forth the compensation information on directors John Coghlan, Virginia Walters, Clint Lohman and Michael Lavigne for the fiscal years ending December 31, 2017 and 2016.

Name	Years	Salary ($)	Bonus  ($)	Stock Awards ($)	Non-Equity Incentive Comp  ($)	All Other Compensation ($)	Totals
John Coghlan	2016	$      -0-	-0-	-0-	-0-	-0-	-0-
Director	2017	$      -0-	-0-	$5,000	-0-	-0-	$5,000
Virginia Walters	2016	$      -0-	-0-	-0-	-0-	-0-	-0-
Director	2017	$      -0-	-0-	$5,000	-0-	-0-	$5,000
Clint Lohman	2016	$      -0-	-0-	-0-	-0-	-0-	-0-
Director	2017	$      -0-	-0-	$5,000	-0-	-0-	$5,000
Michael Lavigne (1)	2016	$      -0-	-0-	-0-	-0-	-0-	-0-
Director	2017	$      -0-	-0-	$5,000	-0-	-0-	$5,000

(1)

Michael Lavigne resigned as Director on November 10, 2017.

Grants of Plan-Based Awards

There were not equity grants outstanding at December 31, 2017.

There was no compensation to any Director during the fiscal year ended December 31, 2016.

Outstanding Equity Awards at Fiscal Year-End

There were no outstanding equity awards to any Executive Officer at the end of the fiscal year ended December 31, 2017.

Director Compensation

During the year ended December 31, 2017 we compensated each of our directors with 2,500 “post-split” common shares valued at $2.00 per share.

Meetings and Committees of the Board of Directors

We presently have no formal independent Board committees. Until further determination, the full Board of Directors will undertake the duties of the audit committee, compensation committee and nominating and governance committee.  The members of the Board of Directors performing these functions as of December 31, 2017, are Roy Rose, John R. Coghlan, Virginia Walters and Clint Lohman.

37

Compensation Committee

The board of directors, in its Compensation Committee role, has discontinued all compensation for the Officers and Directors for the foreseeable future, with the exception of its Treasurer, Virginia Walters.

Audit Committee

The Board of Directors, in its Audit Committee’s role, will be responsible for selecting the Company’s independent auditors, approve the scope of audit and related fees, and review financial reports, audit results, internal accounting procedures, related-party transactions, when appropriate, and programs to comply with applicable requirements relating to financial accountability. The Audit Committee’s function will include the development of policies and procedures for compliance by the Company and its officers and directors with applicable laws and regulations.  The audit committee has reviewed and discussed the attached audited financial statements with management.  The audit committee has received written disclosures from the independent accountant required by Independence Standard Board Standard No. 1, as amended, as adopted by the PCAOB in Rule 3600T and has discussed the independence of the company’s certifying accountant.  Based on this review and discussion, the Board of Directors, in its audit committee role, recommended that the audited financial statements be included in this Annual Report.

Nomination and Governance Committee

The Board of Directors, in its Nomination and Governance Committee role, will be responsible for recommendations to the Board of Directors respecting corporate governance principles; prospective nominees for Director; Board member performance and composition; function, composition and performance of Board committees; succession planning; Director and Officer liability insurance coverage; and Director’s responsibilities.  

Audit Committee Financial Expert

John R. Coghlan, a former Certified Public Accountant, is the Company’s audit committee financial expert.

Shareholder Communications

The Company does not currently have a process for security holders to send communications to the Board.

ITEM 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following tables set forth the ownership of our common stock by each person known by us to be the beneficial owner of more than 5% of our outstanding common stock, our directors, and our executive officers and directors as a group. To the best of our knowledge, the persons named have sole voting and investment power with respect to such shares, except as otherwise noted.  There are not any pending arrangements that may cause a change in control.  However, it is anticipated that there will be one or more changes of control, including adding members of management, possibly involving the private sale or redemption of our principal shareholder's securities or our issuance of additional securities, at or prior to the closing of a business combination.

The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the U.S. Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a "beneficial owner" of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding as of such date plus the number of shares as to which such person has the right to acquire voting or investment power within 60 days. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below, we believe that the beneficial owners of our common stock listed below have sole voting and investment power with respect to the shares shown.

This table is based upon information derived from our stock records. We believe that each of the shareholders named in this table has sole or shared voting and investment power with respect to the shares indicated as beneficially owned; except as set forth above. Applicable percentages are based upon 879,763 “post-split” shares of common stock outstanding as of December 31, 2017, except as modified by Rule 13d-3(d)(1)(i). In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed outstanding shares of common stock subject to conversion of preferred stock and options held by that person that are currently exercisable or exercisable within 60 days of December 31, 2017.  We did not deem those shares outstanding, however, for the purpose of computing the percentage ownership of any other person.  It should be noted that the Company implemented a twenty for one (20:1) reverse stock split on December 12, 2017.

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(a)  Security Ownership of Certain Beneficial Owners

Our stock ownership records do not indicate that the Company has any beneficial owners owing 5% or more of our securities, except for management as set forth below.

(b) Security Ownership of Management.

Common Stock “post-split”  

Title of Class	Name and address of beneficial owner	Amount and nature of beneficial ownership “post-split”  (1)	Percent of Class(3)
Common	Roy Rose (2)	-0-	0%
Common	John R. Coghlan (2)	390,898(4)	44.43%
Common	Virginia Walters (2)	9,050 (5)	1.03%
Common	Clint Lohman (2)	49,013 (6)	5.57%
Directors and Officers as Group		448,961	51.03%

(1)  All ownership is direct unless stated otherwise in these footnotes.

(2)  Address is 3773 West 5th Avenue, Suite 301, Post Falls, ID 83854

(3)  Pursuant to Rule 13d-3(d)(1)(i)  the percentage calculations use different totals of outstanding securities for the purpose of determining ownership. Any securities   not outstanding which are subject to such options, warrants, rights or conversion privileges shall be deemed to be outstanding for the purpose of computing the percentage of outstanding securities of the class owned by such person but shall not be deemed to be outstanding for the purpose of computing the percentage of the class by any other person.  

(4)  Represents 104,530 owned by Coghlan Family Corporation, 20,216 owned by Coghlan, LLC, 650 owned by West 3773 Fifth, LLC, 265,502 owned by John R. Coghlan.  Mr. Coghlan has voting control over Coghlan Family Corporation, Coghlan LLC, and West 3773 Fifth LLC.

(5) Represents 9,050 common shares owned by Ms. Walters.

(6) Represent 49,013 common shares owned by Mr. Lohman.  

ITEM 13.  Certain Relationships and Related Transactions and Director Independence

Affiliates and 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 affiliate 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 100% owned 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. See Financial Statement footnote 11.

Genesis Finance Corporation is a company which is owned 100% by Michael Kirk, who is a former director and officer of GFI.

Placer Creek Mining Company is an Idaho Corporation, which Michael Lavigne is President. Mr. Lavigne was a Director of GFI until his resignation on November 10, 2017.  

Genesis Financial, Inc. had the following related party transactions for the years ended December 31, 2016 and 2017.

It should be noted that the Company implemented a twenty for one (20:1) reverse stock split on December 12, 2017 and the shares set forth below are post-split share totals.

Years Ended December 31, 2017 and 2016:

Michael Kirk and Genesis Finance Corporation

On January 1, 2009, the Company entered into a Management and Servicing Agreement with Genesis Finance Corporation, a Washington Corporation. Mike Kirk is the president of Genesis Finance Corporation. As of January 1, 2011, the Company had down-sized enough to manage a sizable portion of its own affairs, and renegotiated its outsourcing agreement with Genesis Finance Corporation, lowering the management fee to $1,500. As of January 1, 2012 the management fee was removed and the outsourcing services were offset by general offices expenses paid by the Company on behalf of Genesis Finance Corporation.

39

As of December 31, 2017 Genesis Finance Corporation continues a management agreement with the real estate limited liability companies. These agreement are state in the operating agreement of each company and may vary.

John R. Coghlan

As of December 31, 2017, the Company continues a managing agreement for the investment in real estate limited liability companies. The agreement are stated in the operating agreement of each limited liability companies.

On December 7, 2017, John R. Coghlan personally guaranteed our Riverbank line of credit.

On November 13, 2017, John R. Coghlan resigned as Chief Executive Officer and President of the Company.

On April 19, 2017, the Company issued 2,500 shares of common stock for as director compensation valued at Two Dollars per share.

On November 21, 2016, John R. Coghlan terminated his stock options agreement with the Company.

On November 2, 2016, John R. Coghlan purchased 15,767 common shares of Genesis Financial Inc. from Michael Kirk, a former officer of the company.

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.

On February 8, 2016, John R. Coghlan converted his $250,000 note for 36,250 shares of common stock. The note was originally convertible into 12,500 shares of Series "B", or 31,250 shares of common stock equivalents, at the option of Mr. Coghlan. However, Mr. Coghlan agreed to accept 36,250 common shares in lieu of full payment. The 5,000 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 November 13, 2017, the Company entered into a Promissory Note Loan Agreement with Coghlan Family Corporation, a related party (the "Lender").  The Loan Agreement is essentially a revolving line of credit with an initial advance of $25,000 with subsequent advances as requested by the Company.  This indebtedness will survive the proposed Epoint Payment Corp. acquisition transaction.  The loan bears interest at the rate of 6.0% interest and is due and payable on, or before May 15, 2018.  As an inducement to the Lender, the Company agreed to grant one share of post-reverse split common stock for each $2.50 of aggregate principal amount loaned ("Bonus Shares") The Bonus shares will be payable at the loan's maturity date May 15, 2018. At December 31, 2017 the balance was $47,002. (see Note 6)

July 17, 2017, by board action the Company sold a rental property for $30,000, resulting in a loss of ($17,670).

March 8, 2017, by board action the Company sold a rental property for $77,585, resulting in a gain on sale of $342. The Company also sold two REO with a basis of $14,999 for $19,140 for a gain of $4,141.

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 $131,417 was realized by the Company.

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.

Effective August 1, 2016 the terms of the amended Warehouse Line of Credit changed to issuing stock for the interest due on the line of credit monthly. The table below shows the issue dates, number of shares issued and amount of interest being paid. As of July 1, 2017 interest is waived. (See Note 5)

Issue date	Shares Issued “post-split”	Interest Amount
June 30, 2017	1,887	$3,019
May 31, 2017	1,952	$3,123
April 30, 2017	1,887	$3,019
March 31, 2017	1,952	$3,123
February 28, 2017	1,171	$2,811
January 31, 2017	868	$3,123
1st & 2nd Quarter 2017 Totals	9,717	$18,219
December 31, 2016	868	$3,123
November 30, 2016	839	$3,019

40

October 31, 2016	1,562	$3,123
September 30, 2016	1,509	$3,019
August 31, 2016	1,562	$3,123
2016 Total	6,339	$15,407

On August 1, 2016, CFC amended the Warehouse Line of Credit and 2,500 shares of common stock were issued. (See Note 5)

Coghlan, LLC

There was no activity for the years ending December 31, 2017 and 2016.

JC Housing, LLC

There was no activity for the years ending December 31, 2017 and 2016.

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 December 31, 2017, the Company continued a month-to-month tenancy with West 3773 Fifth, LLC, a company owned and controlled by John and Wendy Coghlan. The monthly rent is 1,250. Other office expenses are shared by all of the tenants of which the Company’s portion is estimated at $2,500 per month.

Genesis Finance Corporation “GFC”

As of December 31, 2017, the Company continues a managing agreement for the investment in real estate limited liability companies. The agreement are stated in the operating agreement of each limited liability companies.

Michael Lavigne

On November 10, 2017, Michael Lavigne resigned as Executive Secretary and Director of the Company.

On April 19, 2017, the Company issued 2,500 shares of common stock as director compensation valued at Two Dollars per share.

On March 1, 2017, the Board of Directors appointed Michael Lavigne to hold the Executive Officer position of Sectary and Company Director.

There was no activity for the year ended December 31, 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

On April 19, 2017, the Company issued 2,500 shares of common stock for as director compensation valued at Two Dollars per share.

There was no activity for the year ended December 31, 2016.

For the year ended December 31, 2015, the Company purchased two travel trailers from JC Housing, LLC for $30,000.

Director Independence

The Board has determined that we do not have a majority of independent directors as that term is defined under Rule 4200(a) (15) of the NASDAQ Marketplace Rules, even though such definition does not currently apply to us, because we are not listed on NASDAQ.

ITEM 14.  Principal Accounting Fees and Services.

Fruci & Associates II, PLLC serve as our registered independent accountant and has audited our financial statements for the years ending December 31, 2017. DeCoria, Maichel &Teague, P.S. serves as our registered independent accountant and has audited our financial statements for the years ending December 31, 2016.

41

The following table presents fees for professional audit services rendered by Fruci & Associates II, PLLC and DeCoria, Maichel &Teague, P.S. for the audit or review of GFI’ financial statements for the years ended December 31, 2017 and 2016, and fees billed for other services rendered.

Fiscal Year	2017	2016
Audit Fees	$ 24,500	$ 32,400
Audit Related	-	-
Tax Fees	-	-
All other Fees	-	-
Total Fees	$ 24,500	$ 32,400

(1)Audit fees include fees for services rendered for the audit of our annual financial statements and reviews of our quarterly financial statements.  Above fees are estimates and may vary.

The Board of Directors acts as the Audit Committee.

PART IV

ITEM 15.  Exhibits and Financial Statement Schedules

(a) List Financial Statements filed as a part of this Annual Report

Description                                                                                                                                                               Page No.

Report of Independent Registered Public Accounting Firm

16

Balance Sheets  

17

Statements of Operations and Comprehensive Income (Loss)

18

Statements of Cash Flows  

19

Statement of Changes in Stockholders’ Equity  

20

Notes to Financial Statements  

21-32

List all Exhibits Required by Item 601

Exhibit Number	Description	Location of Exhibit
2.1	Capital Stock Exchange Agreement dated September 8, 2017	8-K filed September 11, 2017
3.1	Articles of Incorporation	SB-2 filed February 20, 2003
3.2	Amended and Restated Articles of Incorporation	SB-2 filed February 20, 2003
3.3	Articles of Amendment Creating Series A Cumulative Preferred Stock	SB-2 Amendment No. 3 filed July 3, 2003
3.4	Articles of Amendment Creating Series B Preferred Stock	8-K filed December 8, 2010
3.5	Bylaws	SB-2 filed February 20, 2003
3.6	Articles of Amendment November 13, 2017	8-K filed November 21, 2017
3.7	Articles of Domestication	8-K filed February 16, 2016
10.1	Management and Loan Servicing Agreement with Genesis Holdings, Inc. dated April 16, 2004	10-K filed April 23, 2010
10.2	Management and Loan Servicing Agreement with Genesis Holdings II, Inc. dated July 15, 2008	10-K filed August 11, 2010
10.3	Promissory Note with American West Bank dated October 14, 2004	10-K filed April 23, 2010
10.4	Warehousing Line of Credit Promissory Note Agreement with Coghlan Family Corporation dated April 18, 2006	10-K filed April 23, 2010
10.5	Promissory Note with Riverbank dated June 29, 2009	10-K filed August 11, 2010
10.6	Form of Flyback Energy, Inc. Series B Preferred Stock Purchase Agreement including Stock Warrant	10-K filed April 13, 2012
10.7	Form of Flyback Energy, Inc. Amended and Restated Investor Rights Agreement	10-K filed April 13, 2012
10.8	Form of Promissory Note relating to Flyback Energy, Inc.	10-K filed April 13, 2012
10.9	Form of Purchase Agreement with AWG International, Inc. dba AWG International Water Corp	10-K filed April 13, 2012
10.10	Form of Common Stock Purchase Warrant AWG International, Inc. dba AWG International Water Corp	10-K filed April 13, 2012
10.11	Warehousing Line of Credit Agreement with Coghlan Family Corporation dated January 1, 2010	10-K  filed August 11, 2010
10.12	Warehousing Line of Credit Agreement with Coghlan Family Corporation dated January 1, 2008	10-K filed August 11, 2010
10.13	Management and Servicing Agreement titled Corporate Restructuring Agreement with Genesis Financial Corporation dated December 27, 2008, effective January 1, 2009	10-K filed August 11, 2010
10.14	Form of $250,000 Convertible Note Agreement between John R. Coghlan and Genesis Financial dated December 15, 2010	10-K filed April 13, 2012
10.15	Form of $250,000 Convertible Note Subscription Agreement between John R. Coghlan and Genesis Financial dated  December 15, 2010	10-K filed April 13, 2012

42

10.16	Form of Security Agreement related to $250,000 Convertible Promissory Note Agreement with John R. Coghlan dated December 15, 2010	10-K filed April 13, 2012
10.17	September 29, 2010 documentation regarding the assignment of certain properties and the business note to Coghlan Family Corporation	10-K filed April 13, 2012
10.18	First Amendment to Warehouse Line of Credit Promissory Note	10-K filed March 24, 2014
10.19	$50,000 Promissory Note with Placer Creek	10-K filed March 24, 2014
10.20	$100,000 Promissory Note with Placer Creek	10-K filed March 24, 2014
10.21	Amendment to Warehouse Line of Credit	8-K filed February 16, 2016
10.22	Loan Agreement and Promissory Note November 13, 2017	Filed herewith
14	Code of Ethical Conduct	10-K filed April 23, 2010
31.1	CEO Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002	Filed herewith
31.2	CFO Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002	Filed herewith
32.1	CEO Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002	Filed herewith
32.2	CFO Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002	Filed herewith
101	The following materials from Genesis Financial, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2017 are formatted in XBRL (eXtensible Business Reporting Language): (i) the Balance Sheets, (ii) the Statements of Operations, (iii) Statement of Stockholders' Deficit, (iv) the Statements of Cash Flow, and (iv) Notes to Financial Statements.	Filed herewith

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: February 14, 2018

Genesis Financial, Inc.

(Registrant)

/s/ Roy Rose

________________________

By: Roy Rose

Title: President, Chief Executive Officer

(Principal Executive Officer)

/s/ John R. Coghlan

________________________

By: John R. Coghlan

Title: Chief Financial Officer (Principal Accounting Officer)

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Dated: February 14, 2018

/s/ Roy Rose

________________________

By: Roy Rose, Director

/s/ John R. Coghlan

________________________

By: John R. Coghlan

Title: Director

/s/ Virginia Walters

________________________

By: Virginia Walters

Title: Director

43

EX-10

Exhibit 10.22

GENESIS FINANCIAL, INC.

LOAN AGREEMENT

This Loan Agreement (this "Agreement") is made and entered into this 13th day of November 2017 (“Effective Date”) by and among Genesis Financial, Inc., a Wyoming corporation (the "Company"), and the Person on the signature page hereto (the “Lender”). The Company and the Lender are hereinafter collectively referred to as the "parties" and each individually as a "party."

WHEREAS, on the terms and subject to the conditions set forth herein, the Company intends  to sell to Lender a promissory note bearing six (6%) percent interest per annum in the initial principal amount of Twenty Five Thousand and no/100 Dollars ($25,000.00) (the “Initial Principal Amount”), and thereafter such additional sums as is mutually agreed (together with the Initial Principal Amount, referred to as the "Aggregate Principal Amount", and each advanced sum referred to as a “Principal Amount”).  As an additional inducement to Lender, the Company will issue Lender one share of common stock of the Company, calculated on a post-reverse split basis, for each $2.50 of Aggregate Principal Amount, said shares to be issued on the Maturity Date (the “Bonus Shares”).  The Bonus Shares will not be registered with the Securities and Exchange Commission, and therefore will be restricted securities.

NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, and conditions set forth below, the parties hereto, intending to be legally bound, hereby agree as follows:

1. General Definitions. As used in this Agreement, the following capitalized terms have the following meanings:

"Act" means the Securities Act of 1933, as amended.

"Business Day" means any day except a Saturday, a Sunday or a statutory holiday in the State of Delaware.

"Certificate of Incorporation" means the Certificate of Incorporation of the Company currently in effect as of the date hereof.

"Governmental Authority" means (a) any nation or government or any province or state or any other political sub-division thereof; (b) any entity, authority or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government; (c) any court, tribunal or arbitrator; and (d) any self-regulatory organization.

"Person" means and include an individual, a partnership, a corporation (including a business trust), a joint stock company, a limited liability company, an unincorporated association, a joint venture or other entity (whether or not having separate legal personality) or a Governmental Authority.

PAGE-1-GFI LOAN AGREEMENT

 2. Purchase and Sale of the Note.

(a) Issuance of the Note. Subject to the terms and conditions hereof, the Company agrees to issue and sell to the Lender, and the Lender agrees to purchase, a promissory note in the form of Exhibit A hereto (the "Note") in the principal amounts set forth, from time-to-time, on Schedule A hereto.

(b) Seniority of the Notes. The Note, when issued and delivered to the Lender, shall rank pari passu to each Note issued to other lenders and to all other present and future unsubordinated and unsecured senior indebtedness of the Company.

(c) Remittance by the Lender. The Lender shall remit the Initial Principal Amount by wire transfer in immediately available funds to Raymond James & Associates, Inc., on behalf of the Company.  The Initial Principal Amount will be remitted to the Company by Lender within five (5) Business Days of execution of this Agreement by the parties.

(d) Deliveries by the Company. Upon receipt of the Initial Principal Amount the Company shall deliver to the Lender a Note.

3. Representations and Warranties of the Company. The Company represents and warrants to the Lender as of the date hereof that:

(a) Due Incorporation, Qualification, etc. The Company is duly organized and validly existing in good standing as a corporation under the laws of the State of Wyoming. The Company has the full requisite corporate power and authority to own, lease and operate its properties and assets it currently owns, leases and operates, and to carry on its business as presently conducted.

(b) Authority. The execution, delivery and performance by the Company of each of this Agreement and the Note (collectively, the "Transaction Documents"), and the consummation of the transactions contemplated hereby and thereby (i) are within the corporate authority of the Company and (ii) have been duly authorized by all necessary actions on the part of the Company.

(c) Enforceability. Each Transaction Document executed by the Company has been duly executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors' rights generally and general principles of equity.

(d) Non-Contravention. Except as stated in the Capital Stock Exchange Agreement with Epoint Payment Corp, Paragraph 2.2(c), 2.7(d), 2.16, 2.18 and subject to the consent of Epoint Payment Corp., the execution, delivery and performance of and compliance with the Transaction Documents by the Company do not and will not result in any violation of or conflict with the Certificate of Incorporation or the Company’s Bylaws, or result in a material breach of, or constitute a material default under any material agreement to which the Company or its properties or assets is or may be bound.

PAGE-2-GFI LOAN AGREEMENT

(e)  Indebtedness to and from Affiliates,  This loan will survive the closing date of the Genesis Financial, Inc. Epoint Payment Corp. Capital Stock Exchange Agreement and is not intended to included within the loan obligations contemplated which will be discharged by the exchange of assets as payment for loan obligations.

(f) Approvals. Assuming the accuracy of the representations and warranties made by the Lender in Section 4 of this Agreement, no consent, approval, qualification, order or authorization of, or designation, declaration or filing with, any Governmental Authority on the part of the Company is required in connection with the valid execution and delivery of this Agreement, or the consummation of the transactions contemplated hereunder.

(g) Capitalization. As of the Effective Date, the authorized and issued share capital of the Company is as follows:

17,594,992 shares of common stock

All the outstanding shares of the Company’s capital stock have been duly authorized and validly issued and are fully paid and non-assessable. Except as set forth herein, there are (i) no outstanding warrants, options, convertible securities or rights to subscribe for or purchase any shares or other securities from the Company, and (ii) no obligations (contingent or otherwise) of the Company to purchase, redeem or otherwise acquire any shares or any interest therein or to pay any dividend or make any other distribution in respect thereof.

On September 8, 2017 the Company entered a Capital Stock Exchange Agreement to acquire EPOINT Payment Corp. (the “Exchange Agreement”).  Under the Exchange Agreement, the Company intends to acquire 100% of the outstanding capital stock of EPOINT.  EPOINT will become a wholly owned subsidiary of the Company.  The transaction will be structured as a tax-free reorganization and exempt from the registration or qualification under the Securities Act of 1933, as amended (the "Act").

Prior to closing, the Company will implement a reverse stock split of its issued and outstanding shares of its common stock, par value $0.001 per share (the "Company Common Stock") on a twenty shares for one share (20:1) basis.  

In exchange for the sale and transfer of all of their capital holdings in EPOINT, the Company undertook to issue at closing to the EPOINT security holders 8,231,256 post-reverse split Company Common Stock.  The Company will also issue  Company Common Stock purchase warrants in exchange for the EPOINT outstanding common stock warrants. It is anticipated that post closing the former EPOINT security shareholders will hold approximately 80% of the issued and outstanding Company Common Stock. The exact number of shares and warrants may vary based on EPOINT's financing plans prior to the anticipated closing date.

(g) Litigation and Compliance. There is no action, suit or proceeding by any Person pending or threatened, against the Company or, to the best knowledge of the Company, against any of its directors or officers, except those, if determined adversely to the Company or any of its directors and executive officers, would not result in, individually or in the aggregate, a Material Adverse Effect (defined below).

PAGE-3-GFI LOAN AGREEMENT

 (h) Existing Indebtedness. As of the Effective Date, and excluding this Agreement,  the Company has no more than $1,137,500 of outstanding indebtedness, obligations and other liabilities, whether absolute, accrued, contingent, fixed or otherwise.

4. Representations and Warranties of the Lender. The Lender represents and warrants to the Company, as of the date hereof, that:

(a) Authority. Such Lender has full legal power and authority to execute and deliver the Agreement. The execution, delivery and performance by such Lender of this Agreement, and the consummation of the transactions contemplated hereby and thereby (i) are within the power of such Lender and (ii) have been duly authorized by all necessary actions on the part of such Lender.

 (b) Approvals. Except for those that have been obtained and assuming the accuracy of the representations and warranties made by the Company in Section 3 of this Agreement, no consent, approval, qualification, order or authorization of, or designation, declaration or filing with, any Governmental Authority on the part of the Lender is required in connection with the valid execution and delivery of this Agreement, or the consummation of the transactions contemplated hereunder.

(c) Enforceability. This Agreement constitutes a valid and binding obligation of the Lender, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors' rights generally and general principles of equity.

(d) Investment Intent; Capacity to Protect Interests. The Lender is purchasing the Note solely for its own account for investment and not with a view to or for sale in connection with any distribution of the Note or any portion thereof and not with any present intention of selling, offering to sell or otherwise disposing of or distributing the Note or any portion thereof in any transaction. The Lender also represents that the entire legal and beneficial interest of the Note is being purchased, and will be held, for the Lender’s account only, and neither in whole or in part for any other Person.

(e) Securities Matters. The Lender is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Act and as reflected on the accredited investor questionnaire accompanying this Agreement. The Lender has (i) such knowledge and experience in financial and business matters to render it capable of independently evaluating the risks and merits of purchasing the Note; (ii) independently evaluated the risks and merits of purchasing the Note and has independently determined that the Note is a suitable investment for it; and (iii) sufficient financial resources to bear the loss of its entire investment in such Note. The Lender is not purchasing the Note as a result of any advertisement, article, notice, or other communication regarding the Note published in any newspaper, magazine, or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement. The Note being purchased by the Lender hereunder for its own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution or public offering thereof within the meaning of the Act. The Lender understands that the Note has not been registered under the Act by reason of its issuance in a transaction

PAGE-4-GFI LOAN AGREEMENT

exempt from the registration and prospectus delivery requirements of the Act pursuant to Section 4 (a) (2) thereof and the provisions of Rule 506(b) of Regulation D promulgated thereunder, and under the securities laws of applicable states and agrees to deliver to the Company, if requested by the Company, an investment letter in customary form. Lender acknowledges that the Note must be held indefinitely unless subsequently registered under the Act or unless an exemption from such registration is available. Lender acknowledges that the Company is neither obligated, nor has the present intention, to register the Note for resale pursuant to a registration statement filed with the SEC. Each of the Lenders is aware of the provisions of Rule 144 promulgated under the Act (“Rule 144”) which permit limited resale of securities purchased in a private placement subject to the satisfaction of certain conditions.  The Company does not currently comply with the informational requirements of Rule 144 and may not so comply in the future.

(f) No Public Market. The Lender understands that no public market now exists for the Note, and that the Company has made no assurances that there will ever be a public market for the Note.

5. Negative Covenants. So long as the Note remains outstanding, the Company shall not, without the prior written consent of the Lenders:

(a) Dividends. Pay any dividends or purchase, redeem or otherwise acquire or make any distribution with respect to any class of capital stock of the Company.

(b) Loans/Investments. Make any loans or investments in excess of $10 million, except accounts receivables, temporary advances to cover incidental expenses or otherwise in the ordinary course of business.

6. Affirmative Covenants.

(a) Notice of Litigation. So long as the Note remains outstanding, the Company shall provide to the Lender promptly after the commencement thereof, notice of all actions, suits, and proceedings before any Governmental Authority against Company that has an amount in controversy that exceeds $100,000.

(b) Notice of Events of Defaults. So long as the Note remains outstanding, the Company shall provide to the Lender, as soon as possible and, in any event, within seven (7) Business Days after the occurrence thereof, with written notice of each event which either (i) is an Event of Default (as defined in the Note), or (ii) with the giving of notice or lapse of time or both would constitute an Event of Default, in each case setting forth the details of such event and the action which is proposed to be taken by the Company with respect thereto.

(c) Use of proceeds. The Company agrees and undertakes that proceeds from the issuance of the Note shall be used for the following purposes:

·

Investment banking retainer; and

·

Sales, General, Administration Expenses and Professional Fees.

PAGE-5-GFI LOAN AGREEMENT

7. Replacement of the Note. Upon receipt by the Company of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note, the Company, at the expense of the Lender requesting such replacement, will execute and deliver a new Note executed in the same manner as the Note being replaced, in the same principal amount as the unpaid principal amount of such Note and dated the date to which interest shall have been paid on such Note or, if no interest shall have yet been so paid, dated the date of issuance of such Note.

8. Miscellaneous.

(a) Waivers and Amendments. Any provision of this Agreement may be amended, waived or modified only upon the written consent of the Company and the Lender.

(b) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Wyoming, without regard to the principles of conflicts of law thereof.      

(c) Arbitration.

(i)

If any dispute between the parties arising under or relating to this Agreement cannot reasonably be resolved by the Parties through mutual negotiation, the Parties agree that the claim or dispute will be resolved by arbitration as set forth in this section.

(ii)

If the dispute or claim cannot be resolved through mutual negotiation, the Parties agree that the matter will then be submitted to and decided by arbitration to be conducted in Las Vegas, Nevada. The arbitration shall be conducted by the American Arbitration Association (“AAA”) in accordance with the then-existing Commercial Arbitration Rules and Mediation Procedures (“Commercial Rules).  Either Party may contact the AAA to seek mediation.  The AAA shall select a single mediator. Each Party shall bear its own expenses and attorneys’ fee incurred in connection with these dispute resolution procedures and will share equally the fees and expenses of the mediator or arbitrator, regardless of the outcome of the mediation or arbitration. The arbitration shall be conducted with 30 days after the first of either party contacts the AAA to request arbitration.  The arbitrator’s decision shall be made within 14 days after the arbitration.   There is no appeal for the arbitrator’s decision or award.  If the arbitrator determines a party has acted in bad faith, he/she shall be authorized to award costs and fees.

(iii)

Should a Party not participate in arbitration, the non-participating party shall have a default award for the amount in dispute entered against it, plus costs of the participating party’s fees and expenses for the arbitration proceeding. This agreement to arbitrate waives any right to trial by jury.  There shall be no appeal.

(d) Successors and Assigns. Subject to the restrictions on transfer described in the Note, the rights and obligations of the Company and the Lender shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.

(e) Entire Agreement. This Agreement together with the Note and constitute and contain the entire agreement between the Company and the Lender and supersede any and all prior agreements, negotiations, correspondence, understandings and communications among the

PAGE-6-GFI LOAN AGREEMENT

parties, whether written or oral, respecting the subject matter hereof; provide, however, that nothing in this Agreement shall be deemed to terminate or supersede the provisions of any confidentiality agreements executed by the parties hereto prior to the date of this Agreement, all of which agreements shall continue in full force and effect until terminated in accordance with their respective terms.

(f) Notices. All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall in writing and faxed, mailed or delivered to each party as follows:

If to the Lender at address noted on signature page.

John R. Coghlan

Coghlan Family Corporation

3773 W. Fifth Ave, Ste. 301

Post Falls, ID 83854

If to the Company:

Genesis Financial, Inc.

Attn.: CEO

3773 West Fifth Avenue, Suite 301

Post Falls, ID 83854

All such notices and communications shall be effective (a) when sent by any overnight service of recognized standing, on the Business Day following the deposit with such service; (b) when mailed, by registered or certified mail, first class postage prepaid and addressed as aforesaid, upon receipt; (c) when delivered by hand, upon delivery; and (d) when faxed, upon confirmation of receipt.

(g) Expenses. Each party shall bear its own expenses.

(h) Severability of this Agreement. The provisions of this Agreement shall be deemed severable. If any provision of this Agreement shall be judicially determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

(i) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall be deemed to constitute one instrument.

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.

PAGE-7-GFI LOAN AGREEMENT

COMPANY:

GENESIS FINANCIAL, INC.

By: s/s Roy Rose

Roy Rose

Chief Executive Officer

LENDER:

Principal Amount USD

Coghlan Family Corporation

$25,000.00

BY:/s/ John R. Coghlan

TITLE: President

Address:

3773 W. Fifth Ave., #311

Post Falls, ID 83854

Email: ___________________

PAGE-8-GFI LOAN AGREEMENT

EXHIBIT A

FORM OF NOTE

THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE ACT OF 1933, AS AMENDED (THE "ACT"). THESE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM.

GENESIS FINANCIAL, INC.

PROMISSORY NOTE

$25,000.00 November 13, 2017

FOR VALUE RECEIVED, GENESIS FINANCIAL, INC., a Wyoming corporation (the "Company") promises to pay to Coghlan Family Corporation, a Washington corporation (the "Lender"), or its registered assigns, in lawful money of the United States of America the principal amount of Twenty Five Thousand and no/100 Dollars ($25,000.00), or such lesser amount as shall equal the outstanding principal amount hereof, together with interest from the date of this Promissory Note (this "Note") on the unpaid principal balance at a rate equal to Six Percent (6.0%) per annum (subject to certain terms and conditions), computed on the basis of the actual number of days elapsed and a year of 365 days. All unpaid principal together with accrued interest shall be due and payable on May 15, 2018 (the "Maturity Date").  As an additional inducement to Lender, the Company will issue Lender one share of common stock of the Company, calculated on a post-reverse split basis, for each $2.50 of Aggregate Principal Amount, said shares to be issued on the Maturity Date.

This Note has been entered into pursuant to the terms of a Loan Agreement between the Company and the Lender, dated November 13, 2017 (”Agreement”).   

The following is a statement of the rights of the Lenders and the conditions to which this Note is subject, and to which the Lender, by the acceptance of this Note, agrees:

1. Rank. This Note shall rank pari passu to all other present and future unsubordinated and unsecured indebtedness of the Company.

2.  Maturity. Except as otherwise provided, all unpaid principal, together with any then unpaid and accrued interest and other amounts payable hereunder, shall be due and payable on the Maturity Date.  

PAGE-9-GFI LOAN AGREEMENT

3. Events of Default. The occurrence of any of the following shall constitute an "Event of Default" under this Note and the Agreement:

(a) Failure to Pay. The Company shall fail to pay (i) when due, any principal payment on the due date hereunder or (ii) any interest payment or other payment required under the terms of this Note on the date due and such payment shall not have been made within five (5) Business Days of the Company's receipt of written notice to the Company of such failure to pay;

(b) Breaches of Covenants. The Company shall fail to observe or perform in any material respect any covenant, obligation, condition or agreement contained in this Note (other than those specified in Section 3(a) above) and such failure shall continue for ten (10) Business Days after the Company's receipt of written notice by the Lender of such failure;

(c) Representations and Warranties. Any representation, warranty, certificate, or other statement (financial or otherwise) made or furnished by or on behalf of the Company to the Lender in writing in connection with this Note or the Agreement, or as an inducement to the Lender to enter into this Note and the Agreement, shall be false, incorrect, incomplete or misleading in any material respect when made or furnished;

(d) Other Payment Obligations. Defaults shall exist under any financing agreements of the Company with any third party or parties which consists of the failure to pay any indebtedness for borrowed money at maturity or which results in a right by such third party or parties, whether or not exercised, to accelerate the maturity of such indebtedness for borrowed money of the Company, in each case, in an aggregate amount in excess of $100,000.00;

(e) Voluntary Bankruptcy or Insolvency Proceedings. The Company shall (i) apply for or consent to the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property, (ii) admit in writing its inability to pay its debts generally as they mature, (iii) make a general assignment for the benefit of its or any of its creditors, (iv) be dissolved or liquidated, (v) commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of or taking possession of its property by any official in an involuntary case or other proceeding commenced against it, or (vi) take any action for the purpose of effecting any of the foregoing;

(f) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator or custodian of the Company, or of all or a substantial part of the property thereof, or an involuntary case or other proceedings seeking liquidation, reorganization or other relief with respect to the Company, or the debts thereof under any bankruptcy, insolvency or other similar law now or hereafter in effect shall be commenced and an order for relief entered or such proceeding shall not be dismissed or discharged within forty-five (45) days of commencement;

(g) Judgments. A final non-appealable judgment, verdict or government order from any Governmental Authority for the payment of money in excess of $500,000.00 shall be rendered against the Company and the same shall remain undischarged for a period of thirty (30) days during which execution shall not be effectively stayed.

PAGE-10-GFI LOAN AGREEMENT

4. Rights of the Lender upon Default. Upon the occurrence of any Event of Default (other than an Event of Default described in Sections 3(e) or 3(f)) and at any time thereafter during the continuance of such Event of Default, the Lender may, by written notice to the Company, declare all outstanding Obligations payable by the Company hereunder to be immediately due and payable without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the Agreement to the contrary notwithstanding. Upon the occurrence of any Event of Default described in Sections 3(e) and 3(f), immediately and without notice, all outstanding Obligations payable by the Company hereunder shall automatically become immediately due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the Agreement to the contrary notwithstanding. In addition to the foregoing remedies, upon the occurrence and during the continuance of any Event of Default, the Lender may exercise any other right, power or remedy granted to it by the Transaction Documents or otherwise permitted to it by law, either by suit in equity or by action at law, or both.

5.

Definitions. As used in this Note, the following capitalized terms have the following meanings:

"Affiliate" means, with respect to any Person, any other Person that, directly or indirectly, Controls, is Controlled by or is under common Control with such Person. "Control", "Controlled", "Controlling" or "under common Control with" with respect to any Person means having the ability to direct the management and affairs of such Person, whether through the ownership of voting securities, by contract or otherwise, and such ability shall be deemed to exist when any Person holds a majority of the outstanding voting securities of such Person.

 “Lender" shall mean the Person specified in the introductory paragraph of this Note or any Person who shall at the time be the registered holder of this Note.

"Obligations" shall mean and include all loans, advances, debts, liabilities and obligations, howsoever arising, owed by the Company to the Lender of every kind and description, now existing or hereafter arising under or pursuant to the terms of this Note and the Agreement, including, all interest, fees, charges, expenses, attorneys' fees and costs and accountants' fees and costs chargeable to and payable by the Company hereunder and thereunder, in each case, whether direct or indirect, absolute or contingent, due or to become due.

6. Miscellaneous.

(a) Successors and Assigns; Transfer of this Note.

(i) Subject to the restrictions on transfer described in this Section 6(a), the rights and obligations of the Company and the Lender shall be binding upon and benefit their respective successors, assigns, heirs, administrators and transferees.

(ii) Either party may freely assign this Note and the rights, interests and obligations hereunder to its Affiliate. A party shall not assign, transfer, sell or otherwise dispose of the Note to non-Affiliates without the other party’s prior written consent.

PAGE-11-GFI LOAN AGREEMENT

 (b) Waiver and Amendment. Any provision of this Note may be amended or modified upon the written consent of the Company and the Lender. Any waiver of any provision of this Note must be in a written form duly executed by the Company or the Lender against whom such waiver is to be enforced.

(c) Notices. All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall be in writing and faxed, mailed or delivered to each party at the respective addresses of the parties as set forth in the Agreement, or at such other address or facsimile number as the Company shall have furnished to the Lender in writing. All such notices and communications will be deemed effectively given if delivered in the manner as set forth in the Agreement.

(d) Payment. Payment shall be made in lawful tender of the United States.

(e) Default Rate; Usury. During any period in which an Event of Default has occurred and is continuing, the Company shall pay interest on the unpaid principal balance hereof at a rate per annum equal to the rate otherwise applicable hereunder plus Three Percent (3%). In the event any interest paid on this Note is deemed to be in excess of the then legal maximum rate, then that portion of the interest payment representing an amount in excess of the then legal maximum rate shall be deemed a payment of principal and applied against the principal of this Note.

(f) Expenses; Waivers. If action is instituted to collect this Note, the Company promises to pay all costs and expenses, including, without limitation, reasonable attorneys' fees and costs, incurred in connection with such action. The Company hereby waives notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor and all other notices or demands relative to this instrument.

(g) Governing Law& Arbitration. The terms and conditions of governing law and arbitration of the Agreement shall apply to this Note.

(h) Limited Recourse No recourse shall be had for the payment of the principal of, or the interest on, this Note, or for any claim based hereon, or otherwise in respect hereof, against any incorporator, shareholder, officer or director, as such, past, present or future, of the Company, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released.

IN WITNESS WHEREOF, Company has caused this Note to be issued as of the date first written above.

GENESIS FINANCIAL, INC.

BY: /s/ Roy Rose

       Roy Rose, CEO

PAGE-12-GFI LOAN AGREEMENT

EX-31

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Roy Rose, certify that:

(1)  I have reviewed this report on Form 10-K of Genesis Financial, Inc., (Registrant).

(2)  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3)  Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4)  The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its subsidiaries, if any, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d) disclosed in this report any changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5)  The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)  all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information ; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: February 14, 2018

         /s/ Roy Rose

By: _____________________________________

Roy Rose, Chief Executive Officer   

EX-31

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, John Coghlan, certify that:

  (1)  I have reviewed this report on Form 10-K of Genesis Financial, Inc., (Registrant).

  (2)  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not  misleading with respect to the period covered by this report;

  (3)  Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 (4)  The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its subsidiaries, if any, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d) disclosed in this report any changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5)  The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)  all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information ; and

(b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: February 14, 2018

          /s/ John R. Coghlan

By: _____________________________________

          John R. Coghlan, Chief Financial Officer

EX-32

Exhibit 32.1

CERTIFICATION PURSUANT TO

U.S.C., SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002), I, Roy Rose, the undersigned Chief Executive Officer of Genesis Financial, Inc., (the “Company”), herby certify that, to the best of my knowledge, the Report on Form 10-K of the Company for the period ended December 31, 2017 (the “Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.  A signed original of this written statement required by Section 906 has been provided to the registrant and will be retained by it and furnished to the Securities and Exchange Commission or its staff upon request.

Dated: February 14, 2018

          /s/ Roy Rose

By: _____________________________________

             Roy Rose, Chief Executive Officer

EX-32

Exhibit 32.2

CERTIFICATION PURSUANT TO

U.S.C., SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002), I, John Coghlan, the undersigned Chief Financial Officer of Genesis Financial, Inc., (the “Company”), herby certify that, to the best of my knowledge, the Report on Form 10-K of the Company for the periods ended December 31, 2017, (the “Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.  A signed original of this written statement required by Section 906 has been provided to the registrant and will be retained by it and furnished to the Securities and Exchange Commission or its staff upon request.

Dated: February 14, 2018

         /s/ John R. Coghlan

By: ________________________________

        John R. Coghlan, Chief Financial Officer

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2017	Feb. 14, 2018	Jun. 30, 2017
Document and Entity Information
Entity Registrant Name	Genesis Financial Inc
Document Type	10-K
Document Period End Date	Dec. 31, 2017
Amendment Flag	false
Entity Central Index Key	0001183082
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		879,763
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	2017
Document Fiscal Period Focus	FY
Entity Public Float			$ 868,928
Entity Incorporation, State Country Name	Wyoming
Trading Symbol	gfnl
Entity Incorporation, Date of Incorporation	Jan. 24, 2002

XML

GENESIS FINANCIAL, INC. Balance Sheets - USD ($)		Dec. 31, 2017	Dec. 31, 2016
CURRENT ASSETS:
Cash and cash equivalents		$ 5,215	$ 10,639
Interest and other receivables		2,635	16,748
Investments in real estate limited liability companies		103,584	104,940
Loans held for sale		306,109	347,755
Real estate owned			14,999
Total current assets		417,543	495,081
NON-CURRENT ASSETS:
Long-term investment		212,619	362,619
Real estate leasehold interest, net of accumulated amortization of $80,848 and $70,527, respectively		93,000	204,423
Rental property, net of accumulated depreciation of $8,145 and $7,568, respectively			121,895
Office equipment, net of accumulated depreciation of $7,422 and $6,865, respectively		511	1,067
Total non-current assets		306,130	690,004
Total assets		723,673	1,185,085
CURRENT LIABILITIES:
Line of credit, affiliated company		930,000	950,000
Line of credit, bank		195,000	180,000
Note payable, affiliated company		47,002
Note payable			28,385
Other current liabilities		10,902	1,115
Total current liabilities		1,182,904	1,159,500
LONG-TERM LIABILITIES:
COMMITMENT AND CONTINGENCIES	[1]	0	0
STOCKHOLDERS' EQUITY:
Series B Preferred stock, $1.00 par value; 2,290,000 authorized and none issued and outstanding		0	0
Common stock, $.001 par value; 100,000,000 authorized, 879,763 and 860,033 issued and outstanding, respectively		880	860
Additional paid-in capital		8,653,072	8,614,872
Accumulated deficit		(9,113,183)	(8,590,147)
Total stockholders' equity (deficit)		(459,231)	25,585
Total liabilities and stockholders' equity (deficit)		$ 723,673	$ 1,185,085

[1] Notes 5 and 6

XML

Statement of Financial Position - Parenthetical - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Statement of financial position
Preferred Stock, Par Value	$ 1.00	$ 1.00
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	879,763	860,033
Common Stock, Shares Outstanding	879,763	860,033
Accumulated depreciation, equipment	$ 7,422	$ 6,865
Accumulated amortization, real estate leasehold interest	80,848	70,527
Accumulated depreciation, rental property	$ 8,145	$ 7,568

XML

GENESIS FINANCIAL, INC. Statements of Operations and Other Comprehensive Income (Loss) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
REVENUE:
Interest (net of write-offs), processing fees and other income	$ 36,986	$ 59,523
Rental income	11,925	27,500
Total revenues	48,911	87,023
OPERATING EXPENSES:
Fair value adjustments	121,102	168,940
Loss on impairment on long term investment	150,000
Bad debt	16,986	42,893
Loss (gain) on rental property	17,329
Loss (gain) on real estate limited liability corporations	6,149	(271,238)
Loss on sale of available for sale security		497,787
Salaries	36,000	44,750
Interest expense and fees, related party	18,219	22,563
Interest expense, other	10,293	3,984
Financing expense, related party		29,000
Depreciation	1,134	3,795
Amortization of rental property	10,321	20,642
Rental property expense	6,302	24,213
Office occupancy and other	178,112	159,725
Total operating expenses	571,946	747,054
NET LOSS	(523,036)	(660,031)
OTHER COMPREHENSIVE INCOME (LOSS):
Reclassification of unrealized loss on available for sale security		497,787
Unrealized loss on available for sale security		(24,357)
Total comprehensive income (loss)		473,430
COMPREHENSIVE INCOME (LOSS)	$ (523,036)	$ (186,602)
BASIC AND DILUTED LOSS PER SHARE	$ (0.60)	$ (0.78)
WEIGHTED AVERAGE SHARE OUTSTANDING BASIC AND DILUTED	873,655	848,167

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GENESIS FINANCIAL, INC. Statements of Changes in Stockholders' Equity - USD ($)	Common Stock Shares	Common Stock Amount	Preferred Stock Shares	Preferred Stock Amount	Additional Paid-in Capital	Accumulated other comprehensive income	Accumulated (Deficit)	Total
Stockholders' equity at Dec. 31, 2015		$ 810		$ 0	$ 8,279,527	$ (473,430)	$ (7,930,116)	$ (123,210)
Shares issued at Dec. 31, 2015	809,944		0
Convertible note converted to stock, value		36			278,964			279,000
Convertible note converted to stock, stock	36,250
Common stock issued for services, value		5			14,995			15,000
Common stock issued for services, stock	5,000
Common stock issued for line of credit interest and fees, value		9			20,399			20,408
Common stock issued for line of credit interest and fees, stock	8,839
Compensation expense for stock options					20,988			20,988
Other comprehensive gain/loss						473,430		473,430
Net loss							(660,031)	(660,031)
Stockholders' equity at Dec. 31, 2016		$ 860		0	8,614,873	0	(8,590,147)	25,585
Shares issued at Dec. 31, 2016	860,033		0
20:1 reverse split roundup share	13	0
Common stock issued for services, value		$ 10			19,990			20,000
Common stock issued for services, stock	10,000
Common stock issued for line of credit interest and fees, value		10			18,209			18,219
Common stock issued for line of credit interest and fees, stock	9,717
Compensation expense for stock options								0
Net loss							(523,036)	(523,036)
Stockholders' equity at Dec. 31, 2017		$ 880		$ 0	$ 8,653,072	$ 0	$ (9,113,183)	$ (459,232)
Shares issued at Dec. 31, 2017	879,763		0

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GENESIS FINANCIAL, INC. Statements of Cash Flows - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (523,036)	$ (660,031)
Noncash items included in net loss:
Fair value adjustments	121,102	168,940
Loss on sale of rental properties	17,329
Write-off of interest and other receivables	16,986	21,506
Financing expense, related party		29,000
Depreciation and amortization	11,455	24,437
Common stock issued for note interest and fees	18,219	20,408
Stock based compensation	20,000	35,988
Loss (gain) on sale of real estate limited liability companies	6,149	(271,238)
Loss on sale of available for sale security		497,787
Loss on impairment of long term investments	150,000
Changes in assets and liabilities:
Interest and other receivables	(2,873)	32,655
Loans held for sale	18,051	(42,893)
Real estate owned	(4,141)	(12,461)
Other current liabilities	9,786	(11,925)
Net cash used in operating activities	(140,973)	(167,827)
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in real estate limited liability company	(4,793)	(37,626)
Proceeds from sale of rental properties	107,585
Proceeds from sale of real estate owned	19,140
Proceeds from sale of real estate limited liability companies		174,227
Proceeds from sale of available for sale security		2,213
Net cash provided (used) by investing activities	121,932	138,814
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowing from note payable with affiliate company, net	47,002
Repayment line of credit with affiliated company, net	(20,000)
Repayment of line of credit from bank	(22,500)
Borrowings from line of credit from bank	37,500	10,000
Repayment of note payable	(28,385)	(1,649)
Net cash provided by financing activities	13,617	8,351
NET DECREASE IN CASH AND CASH EQUIVALENTS	(5,424)	(20,662)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	10,639	31,301
CASH AND CASH EQUIVALENT, END OF YEAR	5,215	10,639
SUPPLEMENTAL DISCLOSURE OF CASH FLOW ACTIVITIES:
Interest paid in cash	$ 9,186	6,805
NONCASH INVESTING AND FINANCING ACTIVITIES:
Convertible note payable to officer converted to common stock		250,000
Loans held for sale converted to REO		62,770
Investment in real estate limited liability company exchanged for reduction of line of credit with affiliated company		300,000
Loans held for sale exchanged for reduction in line of credit with affiliated company		10,000
REO converted to rental property		$ 45,000

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Note 1 - Organization and Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2017

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, 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 - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Significant estimates used herein include those relating to management’s estimate of fair value of loans held for sales, real estate owned, investments in limited liability companies, stock based compensation, long-term investments and allowance for net operating losses.  It is reasonably possible that actual results could differ from those and other estimates used in preparing these financial statements and such differences could be material.

Cash and cash equivalents – Cash and cash equivalents consist of demand deposits, including interest-bearing accounts, held in a local bank. The Company maintains cash balances in various depository institutions that periodically exceed federally insured limits.  Management periodically evaluates the creditworthiness of such institutions. The Company considers all highly liquid investments purchased, with an original maturity of three months or less, to be a cash equivalent.

Fair value measurements - The following information for each class of assets and liabilities that are measured at fair value is disclosed:

1.          the fair value measurement;

2.          the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3);

3.          for fair value measurements using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following:

a.           total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings, and a description of where those gains or losses included in earnings  are reported in the statement of operations;

b.           the amount of these gains or losses attributable to the change in unrealized gains or losses relating to those assets or liabilities still held at the reporting period date and a description of where those unrealized gains or losses are reported;

c.           purchases, sales, issuances, and settlements (net); and

d.           transfers into and/or out of Level 3.

4.          the amount of the total gains or losses for the period in (3)(a) included in earnings that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date and a description of where those unrealized gains or losses are reported in the statement of operations; and

in annual periods only, the valuation technique(s) used to measure fair value and a discussion of changes in valuation techniques, if any, during the period.

Investments available for sale - The cost of marketable equity securities sold is determined by the specific identification method.  Net unrealized holding gains and losses based upon the fair value of the securities, determined using Level 1 inputs, are reported as other comprehensive income, a separate component of stockholders’ equity. Declines in the fair value of individual available-for-sale securities below their cost that are other than temporary result in a write-down of the individual security to its fair value; write-downs are reflected in earnings. Factors affecting the determination of whether an other-than-temporary impairment has occurred include a significant deterioration in the financial condition of the issuer or that management would not have the intent or ability to hold a security for a period of time sufficient to allow for any anticipated recovery in fair value.

Long term investments – Investments not readily marketable are recorded at cost when purchased. The investments in equity securities of privately held companies in which the Company holds less than 20% voting interest and on which the Company does not have the ability to exercise significant influence are accounted for using the cost method. Under the cost method, these investments are carried at the lower of cost or fair value, determined using Level 3 inputs. The Company recognizes an impairment charge when a decline in the fair value of its investments below the cost basis is judged to be other-than-temporary. In making this determination, the Company reviews several factors to determine whether the losses are other-than-temporary, including but not limited to: (i) the length of time the investment was in an unrealized loss position, (ii) the extent to which fair value was less than cost, (iii) the financial condition and near term prospects of the investment and (iv) the Company's intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in fair value.

Investment in real estate limited liability companies – Investments in real estate companies are recorded as cost when initially acquired. For investment in real estate limited liability companies in which the Company does not have joint control or significant influence, the cost method is used. Under the cost method, these investments are carried at the lower of cost or fair value. For investment in real estate companies in which there is joint control between the parties, the equity method is utilized whereby the Company’s share of the underlying real estate limited liability companies’ earnings and losses is included in the statement of operations. For investments in real estate limited liability companies where the Company holds more than 50% of the voting interest and has significant influence, company is consolidated with the presentation of non-controlling interest if material to the financial statements.  Otherwise, the investment is presented similar to the equity method whereby the Company’s share of the underlying earnings and losses is included in the statement of operations.   In determining whether significant influence exists, the Company considers its participation in policy-making decisions and its representation on the company’s board of directors. The Company recognizes an impairment charge when a decline in the fair value of its investments below the carrying amount is judged to be other-than-temporary.

Real estate leasehold interest and rental properties – Leasehold interests in real estate and rental properties are stated at cost unless circumstances indicate that cost cannot be recovered, in which case, an adjustment to the carrying value of the property is made to reduce it to its estimated fair value. Costs clearly associated with the development of the leasehold interest and rental properties are capitalized. Amortization expense is recognized over the term of the leasehold interest and over 39 years for rental properties. Income received on the interests and rental properties is recognized in the period earned.

Loans held for sale – Loans held for sale are initially recorded at the lower of cost or fair value.  Loans held for sale are measured at fair value on a recurring basis.   Fair value for these loans is determined by assessing the probability of borrower default using historical payment performance and available cash flows to the borrower, then projecting the amount and timing of cash flows, including collateral liquidation if repayment weaknesses exist.  The Company considers any valuation inputs related to loans held for sale to be Level 3 inputs. Interest on loans held for sale is included in interest income during the period held for sale. Typically, the Company attempts to sell loans three to twelve months after acquisition. It is the policy of the Company not to hold any loans for investment purposes.  

Real estate owned – Real estate owned (“REO”) (acquired through a loan default) is recorded at fair value on a non-recurring basis.  Upon transfer of a loan held for sale to REO, properties are recorded at amounts which are equal to fair value of the properties based on the following inputs: (1) appraisal provided by a certified appraiser, (2) BPO (Broker’s Pricing Opinion) provided by a qualified real estate broker, (3) site inspection by qualified management of the Company, or (4) a combination of all of the above.  Periodically, non-recurring fair value adjustments to REO are recorded to reflect partial write-downs based on the same inputs.  The Company considers any valuation inputs related to REO to be Level 3 inputs.  The individual carrying values of these assets are reviewed for impairment at least annually and any additional impairment charges are expensed to operations.

Loan sales – Loans are considered sold when the Company surrenders control over the loan to the investors, with standard representations and warranties, and when the risks and rewards inherent in owning the loans have been transferred to the buyer.

Income tax – Deferred taxes are provided on the liability method whereby deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences.  Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets, subject to a valuation allowance, are recognized for future benefits of net operating losses being carried forward.

Earnings per share – Basic earnings per common share have been computed on the basis of the weighted-average number of common shares outstanding during the period presented.  Diluted earnings per common share are computed on the basis of the number of shares that are currently outstanding plus the number of shares that would be issued pursuant to outstanding warrants and stock options unless such shares are deemed to be anti-dilutive.  The dilutive effect of outstanding securities, in periods of future income, would be as follows as of December 31, 2017 and December 31, 2016:

	December 31,
	2017	2016
Stock options	0	0
Convertible debt	0	0
Total possible dilution	0	0

Share-Based Compensation – The Company periodically issues common shares or options to purchase shares of the Company’s common shares to its officers, directors or other parties.  These issuances are valued at fair value.  The Company uses a Black Scholes valuation model for determining fair value of options, and compensation expense is recognized ratably over the vesting periods on a straight line basis.  Compensation expenses for grants that vest upon issue are recognized in the period of grant.

New Accounting Pronouncements – Accounting Standard Update (ASU) 2014-09, Revenue from Contracts with Customers creates a new, principal-based revenue recognition framework that will affect nearly every revue-generating entity. The guidance in ASU 2014-09 is effective for public entities for annual reporting periods beginning after December 15, 2016. Management has not determined the effect, if any; this new standard will have on its financial statements.

Accounting Standard Update (ASU) 2016-02 Leases (Topic 842) modifies the classification criteria and requires lessees to recognize the assets and liabilities on the balance sheet for most leases.  The update is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. Management has not determined the effect, if any; this new standard will have on its financial statements.

Accounting Standard Update (ASU) 2016-15 Statement of Cash Flows (Topic 230):  Classification of Certain Cash Receipts and Cash Payments provides guidance on classification for cash receipts and payments related to eight specific issues.  The update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. We do not expect this update to have a material impact on our financial statements.

Accounting Standard Update (ASU) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments changes how entities will measure and disclose credit losses for most financial assets and certain other instruments that are not measured at fair value through net income and replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information in determining credit loss estimates. ASU 2016-13 also requires enhanced disclosures. ASU 2016-13 is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for all entities for annual periods beginning after December 15, 2018. The Company is currently evaluating the potential effect of this ASU.

Reclassifications – Certain reclassifications have been made to conform prior periods’ data to the current presentation. These reclassifications have no effect on the results of reported operations or stockholders’ equity.

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Note 2 - Loans Held For Sale

12 Months Ended

Dec. 31, 2017

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:

		December 31, 2017		December 31, 2016
Residential	$	79,425	$	120,912
Commercial		226,684		226,843
Other		-
Total	$	306,109	$	347,755

The following table presents a reconciliation of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the years ended December 31, 2017 and 2016:

		Years Ended December 31,
		2017		2016
Beginning Balance	$	347,755	$	503,890
New loans		-		206,079
Principal payments, collections		(21,977)		(167,211)
Loan losses		-		(42,893)
Converted to REO		-		(62,770)
Loan exchanged for reduction of line of credit		-		(10,000)
Fair value adjustments		(20,000)		(146,258)
Repossession expenses		331		66,918
Ending Balance	$	306,109	$	347,755

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Note 3- Real Estate Owned

12 Months Ended

Dec. 31, 2017

Notes

Note 3- Real Estate Owned

NOTE 3- REAL ESTATE OWNED

The Company's fair value of REO consisted of the following:

		December 31,  2017		December 31, 2016
Land	$	-	$	14,999
Commercial		-		-
Total	$	-	$	14,999

The following table presents the change in balance sheet carrying values associated with REO for the years ended December 31, 2016 and 2015:

		Years Ended December 31,
		2017		2016
Beginning Balance	$	14,999	$	27,451
Proceeds from sales of REO		(19,140)		(2,704)
Fair value adjustments		-		(22,682)
Net change in holding costs		-		(4,836)
Transferred from loans held for sale		-		62,770
REO converted to rental property		-		(45,000)
Gain on sale of REO		4,141
Ending Balance	$	-0-	$	14,999

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Note 4 - Other Assets

12 Months Ended

Dec. 31, 2017

Notes

Note 4 - Other Assets

NOTE 4 — OTHER ASSETS

Long term investments:

Flyback Energy, Inc.:

On November 23, 2010, the Company closed the purchase of an equity interest in Flyback Energy, Inc., for $1,200,000.  The purchase was for $1,200,000 of Series “B” Preferred Stock and Common Stock Purchase Warrants from Flyback Energy, Inc., a closely held Washington corporation payable on an installment basis.  On April 25, 2011, the Company purchased 85,274 shares of Series “C” Preferred Stock for $50,000 which is convertible at $0.60 per share and bears a 5% dividend rate.

The Flyback Series "B" Preferred shares are convertible into Flyback common shares on a one for one (1:1) basis and the conversion pricing is subject to adjustments for certain diluting issues of common stock, subdivisions or combinations of common stock, reclassifications, exchanges and/or substitutions of stock.

Flyback Energy, Inc. is a privately-held company that has developed a unique and proprietary electronic switch design that offers control over electrical power and magnetic fields.

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 charge 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. 

Digi Outdoor Media, Inc.:

In 2014, the Company loaned Placer Creek Mining Company (“Placer”) $150,000. The loan interest rate was 5.0% and the Company has an option to convert any or all of the amount due into an equity private placement of Placer. The Placer transaction was a related party transaction. (see Note 11: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.   

On December 31, 2017, the Company due to legal action concerning Digi Outdoor Media booked an impairment charge of $150,000 to reduce the carrying value to $-0-.

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 11) for $0.0003 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, on behalf of itself and note interest holders, through collateralized loan foreclosures, acquired two real property interests, one in Pennsylvania and the other in Washington.  The Company formed two Washington limited liability companies, 21 Bay Street, LLC and Wenatchee Riverview, LLC for the purpose of holding these multiple property interests.  The Company's collective interests were valued at $225,000.  

In 2013, the Company, on behalf of itself and note interest holders, through collateralized loan foreclosure, acquired a real property interest in Hermiston, Oregon.  The Company formed Hermiston 353, LLC to hold the property.  The Company's 12.9% interest was valued at $51,600.   

In 2014, the Company, on behalf of itself and note interest holders, through collateralized loan foreclosure, acquired a real property interest in Pennsylvania.  The Company formed Tioga, LLC to hold the property.  The Company's 31.95% interest was valued at $47,925.  

These companies are 100% controlled and managed by John Coghlan, related party. (see Note 11)

The investments are accounted for using the equity method.  During the years ended December 31, 2017 and 2016, the Company recorded loss (income) of $6,149 and ($271,238), respectively, which represent realized sales of interest and its portion of the real estate company’s loss (income) for the same periods. During the years ended December 31, 2017 and 2016, the Company advanced $4,793 and $37,626 for property taxes and interest owing on the underlying real estate owned by these limited liability companies.

During the year ended December 31, 2016, Wenatchee Riverview, LLC 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 11) for $300,000, resulting in a gain on sale of real estate limited liability company of $131,417. 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, and is accounting for the company’s carrying value of $85,534 as a rental property. The property, being operated as Duffy's Bar, was subsequently leased on a three year lease agreement for $1,500 per month. During the years ended December 31, 2017 and 2016, the company recognized $3,000 and $18,000 per year in rental income.   This is a commercial building being depreciated over thirty-nine (39) years. For the years ended December 31, 2017 and 2016, the company recorded depreciation of $-0- and $2,143. On March 8, 2017, by board action the Company sold this property to Coghlan Family Corporation (see Note 11) for $77,585, resulting in a gain on sale of $342. The purpose of the sale was to generate working capital for the Company.

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 India restaurant. The property was placed into real estate owned during the quarter 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 less a $400 monthly credit toward the option price. During the year ended December 31, 2017 and 2016 the company recognized $8,925 and $2,175 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. In July the Company sent out a notice of default and decided to sell the interest to a related party. On July 17, 2017, by board action, the Company sold a commercial rental property to Coghlan Family Corporation (see Note 11) for $30,000 resulting in a loss of ($17,670), respectively.

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 11). The Company recorded amortization of $-0- and $20,642 for the years ended December 31, 2017 and 2016, respectively. The Company had 0 and 13 lots leased and had rental income of $-0- and $7,325 the years ended December 31, 2017 and 2016, 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, 2017, the Company decided to adjust the carrying value of the property to a fair value estimated of $93,000, based on management’s estimate of discounted cash flows received from the property.

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Note 5 - Lines of Credit

12 Months Ended

Dec. 31, 2017

Notes

Note 5 - Lines of Credit:

NOTE 5 — LINES OF CREDIT

GFI has renewed a $250,000 line of credit with Riverbank. At December 31, 2017 and 2016 the balance owing is $195,000 and $180,000, respectively. The line of credit had a term of twelve months, and an origination fee of 1/2%, or $1,250. Accrued interest is paid monthly. The Riverbank line of credit is senior to the Coghlan Family Corporation, Inc. (“CFC”) line of credit and is collateralized by the assets of GFI. On December 7, 2016 the line of credit was extended to February 1, 2018, 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. At December 31, 2017 the interest rate was 5.50%. The Riverbank line prohibits the CFC line from being paid down below the amount owed to Riverbank during the loan term.  The line is payable on demand and is personally guaranteed by John R. and Wendy B. Coghlan, related parties of the Company.

The Company has a $2,500,000 Warehouse Line of Credit Promissory Note Agreement with the CFC. At December 31, 2017 and December 31, 2016 the balance owing was $930,000 and $950,000, respectively. CFC is an affiliated company controlled by John R. Coghlan and Wendy B. 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. 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.

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. In addition, the Company issued 50,000 shares of its common stock valued at $5,000 as a loan renewal fee. Effective July 1, 2017 CFC agreed to waive the interest and origination fees until December 31, 2017, or earlier if the Epoint Capital Stock Exchange Agreement fails to close. 

In 2016, the Company, by board action authorization, exchanged two assets for a $310,000 principal reduction in the CFC Warehouse Line of Credit. The Company (1) exchanged a loan held for sale with a cost basis of $10,000 and (2) exchanged its 9.1756% interest in a limited liability company valued at $300,000.  

For the year ended December 31, 2017 and December 31, 2016 the Company had issued 9,717 shares and 6,339 shares, respectively, of the Company common stock for a value of $18,219 and $15,407 in interest, respectively.

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Note 6 - Notes Payable

12 Months Ended

Dec. 31, 2017

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 for $250,000 with John R. Coghlan, a related party (see Note 11). The note accrued interest at eight (8%) percent per annum with interest and balance initially due on December 15, 2012.  The note was 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. The note was collateralized by 14,500 shares of the Company’s Series “B” Preferred stock. On October 16, 2012, the Company and Coghlan agreed to extend the due date of the note to December 15, 2016.

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 12,500 “post-split” shares of Series "B", or 31,250 “post-split” shares of common stock equivalents, at the option of Mr. Coghlan. However, Mr. Coghlan agreed to accept 36,250 “post-split” common shares in lieu of full payment. The 5,000 additional “post-split” common shares represents a financing cost to the Company and as such, financing expense of $29,000 was recognized for the year ended December 31, 2016.  The value was calculated by using the market price on the date of conversion. 

Note Payable:

In 2013, the Company assumed a note payable totaling $62,699 relating to a loan it had made in 2005.   When the Company funded the loan in 2005, it sold 100% of its interest to various investors. During 2013, the Company began foreclosure proceedings on behalf of the investors because the borrower was delinquent on payments. During the proceedings, it was determined that the Company had failed to obtain first position in the underlying property and that a separate creditor was in first position. To uphold its agreement with the investors, the Company assumed the balance of the note with the creditor and recognized a loss for the entire amount in 2013. The term of the assumed note is 9.5% until paid in full and monthly payments are $832. On August 30, 2017, the Company paid the note in full.  At December 31, 2016 and 2017, the balance owing was $28,385 and $-0-, respectively.

Note Payable, related party:

On November 13, 2017, the Company entered into a Promissory Note Loan Agreement with Coghlan Family Corporation, a related party (the "Lender").  The Loan Agreement is essentially a revolving line of credit with an initial advance of $25,000 with subsequent advances as requested by the Company.  This indebtedness will survive the proposed Epoint Payment Corp. acquisition transaction.  The loan bears interest at the rate of 6.0% interest and is due and payable on, or before May 15, 2018.  As an inducement to the Lender, the Company agreed to grant one share of post-reverse split common stock for each $2.50 of aggregate principal amount loaned ("Bonus Shares"). The Bonus Shares are not due until the loan's maturity date which is May 15, 2018.  At December 31, 2017 the balance was $47,002.

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Note 7 - Equity

12 Months Ended

Dec. 31, 2017

Notes

Note 7 - Equity

NOTE 7 — EQUITY

Series B Preferred Stock

On November 11, 2010 the Company filed Articles of Amendment to the Amended and Restated Articles of Incorporation creating 2,290,000 “pre-split” shares of Series B Preferred Stock.  The designated Series B Preferred Stock consists of 2,290,000 “pre-split” shares with a par value $1.00; is non-dividend bearing, convertible to Common Stock at $.40 per share subject to any recapitalization. The holders of the Preferred Stock will be entitled to receive, prior and in preference to any Distributions of any assets of the Corporation to the holders of the Common Stock.  Each share of the Preferred Stock is convertible into two and one-half common stock shares at the option of the holder.  Each share of Series B Preferred Stock can automatically converted immediately prior to the closing of a firm commitment underwritten initial public offering pursuant to an effective registration statement filed under the Securities Act of 1933 or upon the receipt by the Corporation of a written request for such request for such conversion from the holders of the majority of the Series B Preferred Stock holders.

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 “pre-split” shares of Series B Preferred were converted into 4,123,750 “pre-split” common shares.  

As of December 31, 2017 no shares of Series B convertible Preferred stock are issued and outstanding.

Common Stock

Effective August 1, 2016 the terms of the amended Warehouse Line of Credit changed to issuing stock for the interest due on the line of credit monthly. For the year ended December 31, 2016, 6,339 “post-split” shares of common stock were issued for interest and 2,500 “post-split” shares of common stock were issued for renewal fee for a value of $20,407, respectively. For the year ended December 31, 2017, 9,717 “post-split” shares of common stock were issued for interest for a value of $18,219, respectively.  As of July 1, 2017 the interest and fee have been waived. (See Note 5)

On April 19, 2017, the Company issued 10,000 shares of common stock as director compensation valued at Two Dollars per share.

On December 12, 2017, the Company implemented a twenty for one (20:1) reverse stock split. This reverse split resulted in reducing the common stock in the amount of 16,715 as of December 31, 2017 with an offsetting increase to additional paid-in capital.

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Note 8 - Stock Options

12 Months Ended

Dec. 31, 2017

Notes

Note 8 - Stock Options

NOTE 8 - STOCK OPTIONS

On April 10, 2002, the Board of Directors approved the Genesis Financial, Inc. Stock Option Plan (the Plan), and the Plan was subsequently approved by the Shareholders of the Company on May 2, 2002.  The plan allows for issuance of Incentive Stock Options (ISOs) and Non-statutory Stock Options (NSOs).  The maximum number of shares that may be subject to option and exercised under the Plan is 65,000 “post-split” shares.  The ISOs and NSOs expire 30 days after the recipient ceases to be an employee for the Company or one year after the recipient’s death. No options are available for future grants under the plan.  No options were issued or exercised in 2017 or 2016.

Compensation expense relating to stock options granted was $-0- and $20,988 during the years ended December 31, 2017 and 2016, respectively, and is classified as ‘office occupancy and other expenses’.

On November 21, 2016, the outstanding stock options were terminated by all holders, the value of the remaining stock options were determined to be immaterial. 

Transactions concerning stock options pursuant to our stock option plans are summarized as follows:

	Shares Subject to Options	Weighted Average Exercise Price	Weighted Average Remaining Term
Outstanding at December 31, 2015	261,000	$0.28	2.9 years
Terminated, November 21, 2016	(261,000)	-
Outstanding at December 31, 2017 and 2016	-0-	$0.0	0 years
Exercisable at December 31, 2017 and 2016	-0-	$0.0

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Note 9 - Income Tax

12 Months Ended

Dec. 31, 2017

Notes

Note 9 - Income Tax:

NOTE 9 – INCOME TAX:

Components of the Company’s deferred income tax assets are as follows:  

	December 31,
	2017	2016
Net operating loss carry forward	$               1,207,000	$            1,099,000
Fair value adjustment	1,104,000	1,045,000
Capital loss not deductible	31,500	194,000
Stock-based compensation	97,000	90,000
Reserves	77,500	0
PPE/Impairment	436,000	389,000
Deferred tax asset	2,953,000	2,817,000
Less valuation allowance	(2,953,000)	(2,817,000)
Net deferred tax asset	$                            0	$                         0

Tax Rate Reconciliation are as follows:

	2017		2016
Book income (loss) at statutory rate	$  (183,000)	-35.00%	$  (231,000)	-35.00%
Effect of state taxes	(21,000)	-4.00%	(29,000)	-4.40%
Increase in valuation allowance	204,000	39.00%	260,000	39.40%
	$             (0)	(0)	$             (0)	(0)

The deferred tax assets were calculated assuming a 21% tax rate at December 31, 2017 and December 31, 2016.  

The federal tax rates changed from 35% to 21%, resulting in a decrease in deferred taxes and related valuation allowance as of 12/31/16 and 12/31/17 in the amount of 676,000 and 744,000, respectively

At December 31, 2017, the Company had a federal net operating loss carry forward available for income tax purposes of approximately $5,100,000 expiring over the years 2029 through 2035. Because management does not believe it is more likely than not that the carry forward will be utilized, the deferred tax assets have been fully reserved.

The Company has analyzed its filing positions in all jurisdictions where it is required to file income tax returns and have recognized that certain tax positions taken in the 2014 through 2017 years could result in adjustments to the fair value adjustments for tax purposes.  However, these adjustments would not result in a tax provision as they would result in revisions to the net operating loss carryforward amount.

Management has determined that the Company is subject to examination of income tax filings in the United States for the 2014 through 2017 tax years. In the event that the Company is assessed penalties and/or interest, penalties will be charged to other operating expense and interest will be charged to interest expense.

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Note 10 - Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2017

Notes

Note 10 - Fair Value of Financial Instruments

NOTE 10 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying values of cash and cash equivalents and lines of credit approximate fair value. The carrying values of the convertible note payable to officer and note payable approximate fair market value as it is based on market rates of interest. The fair value of the long-term investment at December 31, 2017 is approximately $213,000 based upon management’s estimate of the fair value of the common stock of the underlying investment.

The following table sets forth the Company’s financial assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy.  Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

		Fair value at December 31, 2016
		Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	10,639	$	10,639	$	-	$	-
Loans held for sale		347,755		-		-		347,755

		Fair value at December 31, 2017
		Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	5,215	$	5,215	$	-	$	-
Loans held for sale		306,109		-		-		306,109

The Company’s cash and cash equivalent instruments are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices.  

The Company’s available for sale investments were valued using quoted market prices, and accordingly, is included in Level 1.

The fair value of the Company’s loans held for sale is determined by assessing the probability of borrower default using historical payment performance and available cash flows to the borrower, then projecting the amount and timing of cash flows, including collateral liquidation if repayment weaknesses exist.  The Company considers any valuation inputs related to loans held for sale to be Level 3 inputs.  See changes in the fair value of this Level 3 valuation in Note 2.

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Note 11- Related-party Transactions

12 Months Ended

Dec. 31, 2017

Notes

Note 11- Related-party Transactions

NOTE 11— 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 B. 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 former 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. As of January 1, 2012 the management fee was removed and the outsourcing services were offset by general offices expenses paid by the Company on behalf of Genesis Finance Corporation. 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 4, 5 and 6, Genesis Financial, Inc. had the following related party transactions for the year ended December 31, 2017 and 2016.

John R. Coghlan

As of December 31, 2017, the Company continues a managing agreement for the investment in real estate limited liability companies. The agreements are stated in the operating agreement of each limited liability companies.

On December 7, 2017, John R. Coghlan personally guaranteed our Riverbank line of credit.

On November 13, 2017, John R. Coghlan resigned as Chief Executive Officer and President of the Company.

On April 19, 2017, the Company issued 2,500 “post-split” shares of common stock for as director compensation valued at Two Dollars per share.

On November 21, 2016, John R. Coghlan terminated his stock options agreement with the Company.

On November 2, 2016, John R. Coghlan purchased 15,767 “post-split” common shares of Genesis Financial, Inc. from Michael Kirk, a former officer of the company.

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.

On February 8, 2016, John R. Coghlan converted his $250,000 note for 36,250 “post-split” shares of common stock. The note was originally convertible into 12,500 “post-split” shares of Series "B", or 31,250 “post-split” shares of common stock equivalents, at the option of Mr. Coghlan. However, Mr. Coghlan agreed to accept 36,250 “post-split” common shares in lieu of full payment. The 5,000 “post-split” additional common shares represent a financing cost to the Company and as such, financing expense of $29,000 was recognized in the year ended December 31, 2016. (see Note 6)

Coghlan Family Corporation “CFC”

On February 6, 2018, Coghlan Family Corporation entered into a Debt Forgiveness Agreement with Genesis Financial, Inc. and forgave the sum of $441,080.

On February 1, 2018, Coghlan Family Corporation advanced Genesis Financial, Inc. the sum of $175,441.43 by paying off the Riverbank loan balance in full. 

On November 13, 2017, the Company entered into a Promissory Note Loan Agreement with Coghlan Family Corporation, a related party (the "Lender").  The Loan Agreement is essentially a revolving line of credit with an initial advance of $25,000 with subsequent advances as requested by the Company.  This indebtedness will survive the proposed Epoint Payment Corp. acquisition transaction.  The loan bears interest at the rate of 6.0% interest and is due and payable on, or before May 15, 2018.  As an inducement to the Lender, the Company agreed to grant one share of post-reverse split common stock for each $2.50 of aggregate principal amount loaned ("Bonus Shares"). The Bonus Shares are due at the loan's maturity date which is May 15, 2018.   At December 31, 2017 the balance was $47,002. (see Note 6)

July 17, 2017, by board action the Company sold a rental property for $30,000, resulting in a loss of ($17,670).

March 8, 2017, by board action the Company sold a rental property for $77,585, resulting in a gain on sale of $342. The Company also sold two REO with a basis of $14,999 for $19,140 for a gain of $4,141.

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 $131,417 was realized by the Company.

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.

Effective August 1, 2016 the terms of the amended Warehouse Line of Credit changed to issuing stock for the interest due on the line of credit monthly. The table below shows the issue dates, number of shares issued and amount of interest being paid. As of July 1, 2017 interest is waived. (see Note 5)

Issue date	Shares Issued “post-split”	Interest Amount
June 30, 2017	1,887	$3,019
May 31, 2017	1,952	$3,123
April 30, 2017	1,887	$3,019
March 31, 2017	1,952	$3,123
February 28, 2017	1,171	$2,811
January 31, 2017	868	$3,123
1st & 2nd Quarter 2017 Totals	9,717	$18,219
December 31, 2016	868	$3,123
November 30, 2016	839	$3,019
October 31, 2016	1,562	$3,123
September 30, 2016	1,509	$3,019
August 31, 2016	1,562	$3,123
2016 Total	6,339	$15,407

On August 1, 2016, CFC amended the Warehouse Line of Credit and 2,500 “post-split” shares of common stock were issued. (See Note 5)

Coghlan, LLC

There was no activity for the years ending December 31, 2017 and 2016.

JC Housing, LLC

There was no activity for the year ended December 31, 2017 and 2016.

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 December 31, 2017, the Company continued a month-to-month tenancy with West 3773 Fifth, LLC, a company owned and controlled by John and Wendy Coghlan. The monthly rent is $1,250. Other office expenses are shared by all of the tenants of which the Company’s portion is estimated at $2,500 per month.

Genesis Finance Corporation “GFC”

As of December 31, 2017, the Company continues a managing agreement for the investment in real estate limited liability companies. The agreements are stated in the operating agreement of each limited liability companies.

Michael Lavigne

On November 10, 2017, Michael Lavigne resigned as Executive Secretary and Director of the Company.

On April 19, 2017, the Company issued 2,500 “post-split” shares of common stock as director compensation valued at Two Dollars per share.

On March 1, 2017, the Board of Directors appointed Michael Lavigne to hold the Executive Officer position of Secretary and Company Director.

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

On April 19, 2017, the Company issued 2,500 “post-split” shares of common stock as director compensation valued at Two Dollars per share.

There was no activity for the year ended December 31, 2016.

For the year ended December 31, 2015, the Company purchased two travel trailers from JC Housing, LLC for $30,000, which Mr.  Lohman has a 33% interest in.

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Note 9 - Subsquent Events

12 Months Ended

Dec. 31, 2017

Notes

Note 9 - Subsquent Events:

NOTE 12— SUBSEQUENT EVENTS

Genesis Financial Riverbank Loan:

On February 1, 2018, Coghlan Family Corporation advanced Genesis Financial, Inc. the sum of $175,441.43 by paying off the Riverbank loan balance in full.

Coghlan Family Corporation Warehouse Line of Credit:

On February 6, 2018, Coghlan Family Corporation entered into a Debt Forgiveness Agreement with Genesis Financial, Inc. and forgave the sum of $441,080.

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Note 1 - Organization and Summary of Significant Accounting Policies: Use of Estimates (Policies)

12 Months Ended

Dec. 31, 2017

Policies

Use of Estimates

Use of estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Significant estimates used herein include those relating to management’s estimate of fair value of loans held for sales, real estate owned, investments in limited liability companies, stock based compensation, long-term investments and allowance for net operating losses.  It is reasonably possible that actual results could differ from those and other estimates used in preparing these financial statements and such differences could be material.

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Note 1 - Organization and Summary of Significant Accounting Policies: Cash and Cash Equivalents (Policies)

12 Months Ended

Dec. 31, 2017

Policies

Cash and Cash Equivalents

Cash and cash equivalents – Cash and cash equivalents consist of demand deposits, including interest-bearing accounts, held in a local bank. The Company maintains cash balances in various depository institutions that periodically exceed federally insured limits.  Management periodically evaluates the creditworthiness of such institutions. The Company considers all highly liquid investments purchased, with an original maturity of three months or less, to be a cash equivalent.

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Note 1 - Organization and Summary of Significant Accounting Policies: Fair Value Measurements (Policies)

12 Months Ended

Dec. 31, 2017

Policies

Fair Value Measurements

Fair value measurements - The following information for each class of assets and liabilities that are measured at fair value is disclosed:

1.          the fair value measurement;

2.          the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3);

3.          for fair value measurements using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following:

a.           total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings, and a description of where those gains or losses included in earnings  are reported in the statement of operations;

b.           the amount of these gains or losses attributable to the change in unrealized gains or losses relating to those assets or liabilities still held at the reporting period date and a description of where those unrealized gains or losses are reported;

c.           purchases, sales, issuances, and settlements (net); and

d.           transfers into and/or out of Level 3.

4.          the amount of the total gains or losses for the period in (3)(a) included in earnings that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date and a description of where those unrealized gains or losses are reported in the statement of operations; and

in annual periods only, the valuation technique(s) used to measure fair value and a discussion of changes in valuation techniques, if any, during the period.

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Note 1 - Organization and Summary of Significant Accounting Policies: Investment available for sale (Policies)

12 Months Ended

Dec. 31, 2017

Policies

Investment available for sale

Investments available for sale - The cost of marketable equity securities sold is determined by the specific identification method.  Net unrealized holding gains and losses based upon the fair value of the securities, determined using Level 1 inputs, are reported as other comprehensive income, a separate component of stockholders’ equity. Declines in the fair value of individual available-for-sale securities below their cost that are other than temporary result in a write-down of the individual security to its fair value; write-downs are reflected in earnings. Factors affecting the determination of whether an other-than-temporary impairment has occurred include a significant deterioration in the financial condition of the issuer or that management would not have the intent or ability to hold a security for a period of time sufficient to allow for any anticipated recovery in fair value.

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Note 1 - Organization and Summary of Significant Accounting Policies: Long term investments (Policies)

12 Months Ended

Dec. 31, 2017

Policies

Long term investments

Long term investments – Investments not readily marketable are recorded at cost when purchased. The investments in equity securities of privately held companies in which the Company holds less than 20% voting interest and on which the Company does not have the ability to exercise significant influence are accounted for using the cost method. Under the cost method, these investments are carried at the lower of cost or fair value, determined using Level 3 inputs. The Company recognizes an impairment charge when a decline in the fair value of its investments below the cost basis is judged to be other-than-temporary. In making this determination, the Company reviews several factors to determine whether the losses are other-than-temporary, including but not limited to: (i) the length of time the investment was in an unrealized loss position, (ii) the extent to which fair value was less than cost, (iii) the financial condition and near term prospects of the investment and (iv) the Company's intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in fair value.

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Note 1 - Organization and Summary of Significant Accounting Policies: Investment in real estate companies (Policies)

12 Months Ended

Dec. 31, 2017

Policies

Investment in real estate companies

Investment in real estate limited liability companies – Investments in real estate companies are recorded as cost when initially acquired. For investment in real estate limited liability companies in which the Company does not have joint control or significant influence, the cost method is used. Under the cost method, these investments are carried at the lower of cost or fair value. For investment in real estate companies in which there is joint control between the parties, the equity method is utilized whereby the Company’s share of the underlying real estate limited liability companies’ earnings and losses is included in the statement of operations. For investments in real estate limited liability companies where the Company holds more than 50% of the voting interest and has significant influence, company is consolidated with the presentation of non-controlling interest if material to the financial statements.  Otherwise, the investment is presented similar to the equity method whereby the Company’s share of the underlying earnings and losses is included in the statement of operations.   In determining whether significant influence exists, the Company considers its participation in policy-making decisions and its representation on the company’s board of directors. The Company recognizes an impairment charge when a decline in the fair value of its investments below the carrying amount is judged to be other-than-temporary.

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Note 1 - Organization and Summary of Significant Accounting Policies: Real Estate, Policy (Policies)

12 Months Ended

Dec. 31, 2017

Policies

Real Estate, Policy

Real estate leasehold interest and rental properties – Leasehold interests in real estate and rental properties are stated at cost unless circumstances indicate that cost cannot be recovered, in which case, an adjustment to the carrying value of the property is made to reduce it to its estimated fair value. Costs clearly associated with the development of the leasehold interest and rental properties are capitalized. Amortization expense is recognized over the term of the leasehold interest and over 39 years for rental properties. Income received on the interests and rental properties is recognized in the period earned.

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Note 1 - Organization and Summary of Significant Accounting Policies: Loans held for sale (Policies)

12 Months Ended

Dec. 31, 2017

Policies

Loans held for sale

Loans held for sale – Loans held for sale are initially recorded at the lower of cost or fair value.  Loans held for sale are measured at fair value on a recurring basis.   Fair value for these loans is determined by assessing the probability of borrower default using historical payment performance and available cash flows to the borrower, then projecting the amount and timing of cash flows, including collateral liquidation if repayment weaknesses exist.  The Company considers any valuation inputs related to loans held for sale to be Level 3 inputs. Interest on loans held for sale is included in interest income during the period held for sale. Typically, the Company attempts to sell loans three to twelve months after acquisition. It is the policy of the Company not to hold any loans for investment purposes.  

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Note 1 - Organization and Summary of Significant Accounting Policies: Real estate owned (Policies)

12 Months Ended

Dec. 31, 2017

Policies

Real estate owned

Real estate owned – Real estate owned (“REO”) (acquired through a loan default) is recorded at fair value on a non-recurring basis.  Upon transfer of a loan held for sale to REO, properties are recorded at amounts which are equal to fair value of the properties based on the following inputs: (1) appraisal provided by a certified appraiser, (2) BPO (Broker’s Pricing Opinion) provided by a qualified real estate broker, (3) site inspection by qualified management of the Company, or (4) a combination of all of the above.  Periodically, non-recurring fair value adjustments to REO are recorded to reflect partial write-downs based on the same inputs.  The Company considers any valuation inputs related to REO to be Level 3 inputs.  The individual carrying values of these assets are reviewed for impairment at least annually and any additional impairment charges are expensed to operations.

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Note 1 - Organization and Summary of Significant Accounting Policies: Loan sales (Policies)

12 Months Ended

Dec. 31, 2017

Policies

Loan sales

Loan sales – Loans are considered sold when the Company surrenders control over the loan to the investors, with standard representations and warranties, and when the risks and rewards inherent in owning the loans have been transferred to the buyer.

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Note 1 - Organization and Summary of Significant Accounting Policies: Income tax (Policies)

12 Months Ended

Dec. 31, 2017

Policies

Income tax

Income tax – Deferred taxes are provided on the liability method whereby deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences.  Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets, subject to a valuation allowance, are recognized for future benefits of net operating losses being carried forward.

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Note 1 - Organization and Summary of Significant Accounting Policies: Earnings Per Share (Policies)

12 Months Ended

Dec. 31, 2017

Policies

Earnings Per Share

Earnings per share – Basic earnings per common share have been computed on the basis of the weighted-average number of common shares outstanding during the period presented.  Diluted earnings per common share are computed on the basis of the number of shares that are currently outstanding plus the number of shares that would be issued pursuant to outstanding warrants and stock options unless such shares are deemed to be anti-dilutive.  The dilutive effect of outstanding securities, in periods of future income, would be as follows as of December 31, 2017 and December 31, 2016:

	December 31,
	2017	2016
Stock options	0	0
Convertible debt	0	0
Total possible dilution	0	0

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Note 1 - Organization and Summary of Significant Accounting Policies: Share-Based Compensation (Policies)

12 Months Ended

Dec. 31, 2017

Policies

Share-Based Compensation

Share-Based Compensation – The Company periodically issues common shares or options to purchase shares of the Company’s common shares to its officers, directors or other parties.  These issuances are valued at fair value.  The Company uses a Black Scholes valuation model for determining fair value of options, and compensation expense is recognized ratably over the vesting periods on a straight line basis.  Compensation expenses for grants that vest upon issue are recognized in the period of grant.

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Note 1 - Organization and Summary of Significant Accounting Policies: Description of New Accounting Pronouncements Not yet Adopted (Policies)

12 Months Ended

Dec. 31, 2017

Policies

Description of New Accounting Pronouncements Not yet Adopted

New Accounting Pronouncements – Accounting Standard Update (ASU) 2014-09, Revenue from Contracts with Customers creates a new, principal-based revenue recognition framework that will affect nearly every revue-generating entity. The guidance in ASU 2014-09 is effective for public entities for annual reporting periods beginning after December 15, 2016. Management has not determined the effect, if any; this new standard will have on its financial statements.

Accounting Standard Update (ASU) 2016-02 Leases (Topic 842) modifies the classification criteria and requires lessees to recognize the assets and liabilities on the balance sheet for most leases.  The update is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. Management has not determined the effect, if any; this new standard will have on its financial statements.

Accounting Standard Update (ASU) 2016-15 Statement of Cash Flows (Topic 230):  Classification of Certain Cash Receipts and Cash Payments provides guidance on classification for cash receipts and payments related to eight specific issues.  The update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. We do not expect this update to have a material impact on our financial statements.

Accounting Standard Update (ASU) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments changes how entities will measure and disclose credit losses for most financial assets and certain other instruments that are not measured at fair value through net income and replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information in determining credit loss estimates. ASU 2016-13 also requires enhanced disclosures. ASU 2016-13 is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for all entities for annual periods beginning after December 15, 2018. The Company is currently evaluating the potential effect of this ASU.

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Note 1 - Organization and Summary of Significant Accounting Policies: Reclassifications (Policies)

12 Months Ended

Dec. 31, 2017

Policies

Reclassifications

Reclassifications – Certain reclassifications have been made to conform prior periods’ data to the current presentation. These reclassifications have no effect on the results of reported operations or stockholders’ equity.

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Note 1 - Organization and Summary of Significant Accounting Policies: Earnings Per Share: Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2017

Tables/Schedules

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

	December 31,
	2017	2016
Stock options	0	0
Convertible debt	0	0
Total possible dilution	0	0

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Note 2 - Loans Held For Sale: Schedule of Other Assets (Tables)

12 Months Ended

Dec. 31, 2017

Tables/Schedules

Schedule of Other Assets

		December 31, 2017		December 31, 2016
Residential	$	79,425	$	120,912
Commercial		226,684		226,843
Other		-
Total	$	306,109	$	347,755

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Note 2 - Loans Held For Sale: Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Tables)

12 Months Ended

Dec. 31, 2017

Tables/Schedules

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

		Years Ended December 31,
		2017		2016
Beginning Balance	$	347,755	$	503,890
New loans		-		206,079
Principal payments, collections		(21,977)		(167,211)
Loan losses		-		(42,893)
Converted to REO		-		(62,770)
Loan exchanged for reduction of line of credit		-		(10,000)
Fair value adjustments		(20,000)		(146,258)
Repossession expenses		331		66,918
Ending Balance	$	306,109	$	347,755

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Note 3- Real Estate Owned: Real Estate Owned, Disclosure of Detailed Components (Tables)

12 Months Ended

Dec. 31, 2017

Tables/Schedules

Real Estate Owned, Disclosure of Detailed Components

		December 31,  2017		December 31, 2016
Land	$	-	$	14,999
Commercial		-		-
Total	$	-	$	14,999

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Note 3- Real Estate Owned: Other Real Estate, Covered, Roll Forward (Tables)

12 Months Ended

Dec. 31, 2017

Tables/Schedules

Other Real Estate, Covered, Roll Forward

		Years Ended December 31,
		2017		2016
Beginning Balance	$	14,999	$	27,451
Proceeds from sales of REO		(19,140)		(2,704)
Fair value adjustments		-		(22,682)
Net change in holding costs		-		(4,836)
Transferred from loans held for sale		-		62,770
REO converted to rental property		-		(45,000)
Gain on sale of REO		4,141
Ending Balance	$	-0-	$	14,999

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Note 8 - Stock Options: Share-based Compensation, Stock Options, Activity (Tables)

12 Months Ended

Dec. 31, 2017

Tables/Schedules

Share-based Compensation, Stock Options, Activity

	Shares Subject to Options	Weighted Average Exercise Price	Weighted Average Remaining Term
Outstanding at December 31, 2015	261,000	$0.28	2.9 years
Terminated, November 21, 2016	(261,000)	-
Outstanding at December 31, 2017 and 2016	-0-	$0.0	0 years
Exercisable at December 31, 2017 and 2016	-0-	$0.0

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Note 9 - Income Tax: Schedule of Deferred Tax Assets and Liabilities (Tables)

12 Months Ended

Dec. 31, 2017

Tables/Schedules

Schedule of Deferred Tax Assets and Liabilities

	December 31,
	2017	2016
Net operating loss carry forward	$               1,207,000	$            1,099,000
Fair value adjustment	1,104,000	1,045,000
Capital loss not deductible	31,500	194,000
Stock-based compensation	97,000	90,000
Reserves	77,500	0
PPE/Impairment	436,000	389,000
Deferred tax asset	2,953,000	2,817,000
Less valuation allowance	(2,953,000)	(2,817,000)
Net deferred tax asset	$                            0	$                         0

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Note 9 - Income Tax: Schedule of Effective Income Tax Rate Reconciliation (Tables)

12 Months Ended

Dec. 31, 2017

Tables/Schedules

Schedule of Effective Income Tax Rate Reconciliation

	2017		2016
Book income (loss) at statutory rate	$  (183,000)	-35.00%	$  (231,000)	-35.00%
Effect of state taxes	(21,000)	-4.00%	(29,000)	-4.40%
Increase in valuation allowance	204,000	39.00%	260,000	39.40%
	$             (0)	(0)	$             (0)	(0)

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Note 10 - Fair Value of Financial Instruments: Schedule of Assets measured at fair value on a recurring basis by level (Tables)

12 Months Ended

Dec. 31, 2017

Dec. 31, 2016

Tables/Schedules

Schedule of Assets measured at fair value on a recurring basis by level

		Fair value at December 31, 2017
		Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	5,215	$	5,215	$	-	$	-
Loans held for sale		306,109		-		-		306,109

		Fair value at December 31, 2016
		Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	10,639	$	10,639	$	-	$	-
Loans held for sale		347,755		-		-		347,755

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Note 11- Related-party Transactions: Schedule of Related Party Transactions (Tables)

12 Months Ended

Dec. 31, 2017

Tables/Schedules

Schedule of Related Party Transactions

Issue date	Shares Issued “post-split”	Interest Amount
June 30, 2017	1,887	$3,019
May 31, 2017	1,952	$3,123
April 30, 2017	1,887	$3,019
March 31, 2017	1,952	$3,123
February 28, 2017	1,171	$2,811
January 31, 2017	868	$3,123
1st & 2nd Quarter 2017 Totals	9,717	$18,219
December 31, 2016	868	$3,123
November 30, 2016	839	$3,019
October 31, 2016	1,562	$3,123
September 30, 2016	1,509	$3,019
August 31, 2016	1,562	$3,123
2016 Total	6,339	$15,407

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Note 1 - Organization and Summary of Significant Accounting Policies (Details)

12 Months Ended

Dec. 31, 2017

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, equity funds and funds generated from external borrowings including a line of credit facility from a related party.

Entity Incorporation, Date of Incorporation

Jan. 24, 2002

Entity Incorporation, State Country Name

Wyoming

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Note 1 - Organization and Summary of Significant Accounting Policies: Earnings Per Share: Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Details
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements	0	0
Incremental Common Shares Attributable to Dilutive Effect of Conversion of Debt Securities	0	0
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	0	0

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Note 2 - Loans Held For Sale: Schedule of Other Assets (Details) - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Details
Loans and Leases Receivable, Gross, Consumer, Real Estate	$ 79,425	$ 120,912
Loans held for sale, commercial	226,684	226,843
Loans held for sale	$ 306,109	$ 347,755

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Note 2 - Loans Held For Sale: Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Details
Fair Value Assets Liabilities Measured On Recurring Basis Beginning Balance	$ 347,755	$ 503,890
Mortgage Loans on Real Estate, New Mortgage Loans		206,079
Debt Instrument, Periodic Payment, Principal	(21,977)	(167,211)
Gain (Loss) on Sale of Mortgage Loans		(42,893)
Converted to rental property		(62,770)
Exchanged for reduction in line of credit, related party		(10,000)
Adjustments to fair value.	(20,000)	(146,258)
Foreclosed Real Estate Expense	331	66,918
Fair Value, Assets and Liabilities Measured on Recurring Basis, Gain (Loss) Included in Earnings	$ 306,109	$ 347,755

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Note 3- Real Estate Owned: Real Estate Owned, Disclosure of Detailed Components (Details)	Dec. 31, 2016 USD ($)
Details
Land	$ 14,999
Real estate owned	$ 14,999

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Note 3- Real Estate Owned: Other Real Estate, Covered, Roll Forward (Details)	12 Months Ended
	Dec. 31, 2017 USD ($)
Details
Property subject to or available for operating lease beginning balance	$ 27,451
Long lived assets held for sale, sale proceeds	(2,704)
Real Estate Owned, Valuation Allowance, Valuation Increase	(22,682)
Real Estate Owned, Valuation Allowance, Period Increase (Decrease)	$ (4,836)
Transferred from Loans Held for Sale	62,770
REO converted to rental property	$ (45,000)
Long lived assets held for sale, gain on sale	4,141
Property subject to or available for operating lease ending balance	$ 14,999

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Note 4 - Other Assets (Details)

12 Months Ended

Dec. 31, 2017

Details

Equity Method Investments and Joint Ventures Disclosure

Long term investments:

Flyback Energy, Inc.:

On November 23, 2010, the Company closed the purchase of an equity interest in Flyback Energy, Inc., for $1,200,000.  The purchase was for $1,200,000 of Series “B” Preferred Stock and Common Stock Purchase Warrants from Flyback Energy, Inc., a closely held Washington corporation payable on an installment basis.  On April 25, 2011, the Company purchased 85,274 shares of Series “C” Preferred Stock for $50,000 which is convertible at $0.60 per share and bears a 5% dividend rate.

The Flyback Series "B" Preferred shares are convertible into Flyback common shares on a one for one (1:1) basis and the conversion pricing is subject to adjustments for certain diluting issues of common stock, subdivisions or combinations of common stock, reclassifications, exchanges and/or substitutions of stock.

Flyback Energy, Inc. is a privately-held company that has developed a unique and proprietary electronic switch design that offers control over electrical power and magnetic fields.

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 charge 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. 

Digi Outdoor Media, Inc.:

In 2014, the Company loaned Placer Creek Mining Company (“Placer”) $150,000. The loan interest rate was 5.0% and the Company has an option to convert any or all of the amount due into an equity private placement of Placer. The Placer transaction was a related party transaction. (see Note 11: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.   

On December 31, 2017, the Company due to legal action concerning Digi Outdoor Media booked an impairment charge of $150,000 to reduce the carrying value to $-0-.

Digi Outdoor Media, Inc. is a startup company in the business of building and leasing outdoor advertising signs.

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 11) for $0.0003 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, on behalf of itself and note interest holders, through collateralized loan foreclosures, acquired two real property interests, one in Pennsylvania and the other in Washington.  The Company formed two Washington limited liability companies, 21 Bay Street, LLC and Wenatchee Riverview, LLC for the purpose of holding these multiple property interests.  The Company's collective interests were valued at $225,000.  

In 2013, the Company, on behalf of itself and note interest holders, through collateralized loan foreclosure, acquired a real property interest in Hermiston, Oregon.  The Company formed Hermiston 353, LLC to hold the property.  The Company's 12.9% interest was valued at $51,600.   

In 2014, the Company, on behalf of itself and note interest holders, through collateralized loan foreclosure, acquired a real property interest in Pennsylvania.  The Company formed Tioga, LLC to hold the property.  The Company's 31.95% interest was valued at $47,925.  

These companies are 100% controlled and managed by John Coghlan, related party. (see Note 11)

The investments are accounted for using the equity method.  During the years ended December 31, 2017 and 2016, the Company recorded loss (income) of $6,149 and ($271,238), respectively, which represent realized sales of interest and its portion of the real estate company’s loss (income) for the same periods. During the years ended December 31, 2017 and 2016, the Company advanced $4,793 and $37,626 for property taxes and interest owing on the underlying real estate owned by these limited liability companies.

During the year ended December 31, 2016, Wenatchee Riverview, LLC 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 11) for $300,000, resulting in a gain on sale of real estate limited liability company of $131,417. 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.

Lessor, Operating Leases

Rental Properties:

At the end of 2013, the Company foreclosed on a loan previously held for sale in Lebanon, Oregon through the bankruptcy courts, and is accounting for the company’s carrying value of $85,534 as a rental property. The property, being operated as Duffy's Bar, was subsequently leased on a three year lease agreement for $1,500 per month. During the years ended December 31, 2017 and 2016, the company recognized $3,000 and $18,000 per year in rental income.   This is a commercial building being depreciated over thirty-nine (39) years. For the years ended December 31, 2017 and 2016, the company recorded depreciation of $-0- and $2,143. On March 8, 2017, by board action the Company sold this property to Coghlan Family Corporation (see Note 11) for $77,585, resulting in a gain on sale of $342. The purpose of the sale was to generate working capital for the Company.

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 India restaurant. The property was placed into real estate owned during the quarter 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 less a $400 monthly credit toward the option price. During the year ended December 31, 2017 and 2016 the company recognized $8,925 and $2,175 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. In July the Company sent out a notice of default and decided to sell the interest to a related party. On July 17, 2017, by board action, the Company sold a commercial rental property to Coghlan Family Corporation (see Note 11) for $30,000 resulting in a loss of ($17,670), respectively.

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 11). The Company recorded amortization of $-0- and $20,642 for the years ended December 31, 2017 and 2016, respectively. The Company had 0 and 13 lots leased and had rental income of $-0- and $7,325 the years ended December 31, 2017 and 2016, 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, 2017, the Company decided to adjust the carrying value of the property to a fair value estimated of $93,000, based on management’s estimate of discounted cash flows received from the property.

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Note 5 - Lines of Credit (Details) - USD ($)		6 Months Ended	12 Months Ended
	Aug. 01, 2016	Jun. 30, 2017	Dec. 31, 2017	Dec. 31, 2016
Details
Line of Credit Facility, Current Borrowing Capacity			$ 250,000
Line of credit, bank			$ 195,000	$ 180,000
Line of Credit Facility, Asset Restrictions			The Riverbank line prohibits the CFC line from being paid down below the amount owed to Riverbank during the loan term. The line is payable on demand and is personally guaranteed by John R. and Wendy B. Coghlan, related parties of the Company.
Line of Credit Facility, Maximum Borrowing Capacity			$ 2,500,000
Line of credit, affiliated company			$ 930,000	$ 950,000
Stock issued for loan renewal fee, stock	50,000
Stock issued for loan renewal fee, value	$ 5,000
Stock issued for promissory note interest, stock		9,717	9,717	6,339
Stock issued for promissory note interest, value		$ 18,219	$ 18,219	$ 15,407

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Note 6 - Notes Payable (Details) - USD ($)		3 Months Ended	12 Months Ended
	Dec. 31, 2017	Mar. 31, 2016	Dec. 31, 2016	Nov. 13, 2017
Details
Financing expense, related party		$ 29,000	$ 29,000
Notes Payable, Related Parties, Noncurrent				$ 25,000
Bonus Share Balance	$ 47,002

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Note 7 - Equity (Details) - shares		6 Months Ended	12 Months Ended
	Jun. 26, 2015	Jun. 30, 2017	Dec. 31, 2017	Dec. 31, 2016
Details
Represents the ConvertiblePreferedStockConvertedToOtherSecurities (number of shares), during the indicated time period.	1,649,500
Stock Issued During Period, Shares, Conversion of Convertible Securities	4,123,750
Stock issued for promissory note interest, stock		9,717	9,717	6,339
Stock issued for renewal fee, stock				2,500
Stock issued for renewal fee, value				20,407
Stock issued for interest, stock			18,219
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures			10,000

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Note 8 - Stock Options (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Details
Compensation expense for stock options	$ 0	$ 20,988

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Note 8 - Stock Options: Share-based Compensation, Stock Options, Activity (Details) - $ / shares	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2015
Details
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number		0	261,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price		$ 0.0	$ 0.28
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period	(261,000)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number		0	261,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price		$ 0.0	$ 0.28

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Note 9 - Income Tax: Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Details
Deferred Tax Assets, Operating Loss Carryforwards	$ 1,207,000	$ 1,099,000
Deferred Tax Assets, Other	1,104,000	1,045,000
Deferred Other Tax Expense (Benefit)	31,500	194,000
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits, Share-based Compensation Cost	97,000	90,000
Deferred Tax Assets, Tax Deferred Expense, Reserves and Accruals	77,500	0
Deferred Tax Assets, Other Tax Carryforwards	2,953,000	2,817,000
Deferred Tax Assets, Valuation Allowance	(2,953,000)	(2,817,000)
Deferred Tax Assets, Net of Valuation Allowance	$ 0	$ 0

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Note 9 - Income Tax: Schedule of Effective Income Tax Rate Reconciliation (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Details
Effective Income Tax Rate Reconciliation at Federal Statutory Income Tax Rate, Amount	$ (0.3500)	$ (0.3500)
Effective Income Tax Rate Reconciliation, State and Local Income Taxes, Amount	(0.0400)	(0.0440)
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Amount	0.3900	0.3940
Income Tax Expense (Benefit)	$ 0	$ 0

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Note 9 - Income Tax (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Details
Assumed tax rate	21.00%
Valuation Allowances and Reserves, Period Increase (Decrease)	$ 744,000	$ 676,000
Deferred Tax Assets, Tax Credit Carryforwards	$ 5,100,000

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Note 10 - Fair Value of Financial Instruments: Schedule of Assets measured at fair value on a recurring basis by level (Details) - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Details
Cash Equivalents, at Carrying Value	$ 5,215	$ 10,639
Fair value inputs level 1, cash and cash equivalents	5,215	10,639
Loans held for sale	306,109	347,755
Fair value inputs level 3, loans held for sale	$ 306,109	$ 347,755

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Note 11- Related-party Transactions (Details) - USD ($)			12 Months Ended
	Apr. 19, 2017	Dec. 31, 2015	Dec. 31, 2017
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 B. 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 former 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. As of January 1, 2012 the management fee was removed and the outsourcing services were offset by general offices expenses paid by the Company on behalf of Genesis Finance Corporation. 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.
Loans Receivable, Net		$ 150,000
Conversion of Stock, Shares Converted		300,000
Lavigne
Common stock issued for services, stock	2,500
Lohman
Common stock issued for services, stock	2,500

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Note 11- Related-party Transactions: Schedule of Related Party Transactions (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2017	Dec. 31, 2016
Details
Stock issued for promissory note interest, stock	9,717	9,717	6,339
Stock issued for promissory note interest, value	$ 18,219	$ 18,219	$ 15,407

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Note 9 - Subsquent Events (Details)	12 Months Ended
	Dec. 31, 2017
Advance
Subsequent Event, Description	On February 1, 2018, Coghlan Family Corporation advanced Genesis Financial, Inc. the sum of $175,441.43 by paying off the Riverbank loan balance in full.
Debt Forgiveness
Subsequent Event, Description	On February 6, 2018, Coghlan Family Corporation entered into a Debt Forgiveness Agreement with Genesis Financial, Inc. and forgave the sum of $441,080.