**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-KSB**

[xx]	ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED JULY 31, 2002

[   ]	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____ TO ____

Commission file Number:  0-32523

**LIONS GATE INVESTMENT LIMITED**

(Name of small business issuer in its charter)

Nevada

(State or other jurisdiction of incorporation or organization)

98-0222710

(I.R.S. Employer Identification Number)

P.O. Box 86020, 2106 - 33rd Avenue, S.W.

Calgary, Alberta, T2T 1Z0     Canada

(Address of principal executive offices)

(403)606-7696

(Issuer's telephone number)

Securities registered under Section 12(b) of the Exchange Act:	None

Securities registered under Section 12(g) of the Exchange Act:	Common Shares

Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange
Act during the past 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.  [ X ] Yes  [   ] No

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained
in this form, and no disclosure will be contained, to the best of Issuer's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB.  [ X ]

The Issuer's revenues for its fiscal year ended July 31, 2002 were $4,106.

The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant was
$0.00 as at July 31, 2002 as the Registrant's shares are not yet listed or quoted on an exchange.  On
September 27, 2002, the Issuer was advised that its shares have been cleared to trade on the NASD OTC
Bulletin Board.



On July 31, 2002, the number of shares outstanding of the registrant's Common Stock was 2,650,000.

Transitional Small Business Disclosure Format (Check one):  Yes ____; No __X__

**PART I**

**BUSINESS**



**Item 1.  Description of Business**



We are a junior oil and gas exploration company.  The acquisition of our royalty interest on February 14,
2001 constituted the start up of our operations.  We have a 2% overriding royalty on certain petroleum
producing lands in the Province of Alberta, Canada known as Edgerton "27" and located at Township 42,
Range 3 West 4 Meridian, Section 27.  We acquired our royalty in an arm's length negotiation with Mr.
N. Desmond Smith of Calgary, Alberta in consideration for 100,000 of our common shares at a deemed
price of $0.50 per share.  Following our acquisition of the royalty, we offered Mr. Smith the position of
President of our company.  Mr. Smith will be overseeing our initial exploration in the Wainwright area
and has been given the task of assembling our portfolio of oil and gas exploration properties in western
Canada and the western United States.

Since acquiring our royalty interest, we have obtained a comprehensive library of geophysical data in the
area of our initial property.  This geophysical data library is comprised of data which has been acquired
by third parties and which is available for purchase through seismic data brokers.  We currently have
funds available to acquire geophysical seismic data in the area of our royalty interests.  The geophysical
seismic data which we obtain will be examined by management for anomalous characteristics.  This
purchase of geophysical seismic data and evaluation by management constitutes our phase one
exploration program in the Wainwright, Alberta area.  In the event anomalous characteristics are
identified by management on the geophysical data which is examined, we will conduct a geophysical
acquisition program of approximately 10 kilometers either exclusively or with a joint venture partner.
This program will involve permitting, seismic acquisition, processing and interpretation.  This will
constitute our phase two exploration program in our area of interest.  We currently have funds on hand to
finance this second phase of exploration.

**Item 2.  Description of Property**

****

Office Premises

We operate from our offices at 2106 - 33rd Avenue, S.W., Calgary, Alberta, T2T 1Z0, Canada.  Space is
provided to us on a rent free basis by Mr. Smith, a director of the Company.  We are not a party to any
lease.  It is anticipated that this arrangement will remain until we are able to generate revenue from
operations and require additional office space for new employees.  Management believes that this space
will meet our needs for the foreseeable future.

Oil and Gas Properties

Our 2% gross overriding royalty burdens the petroleum and natural gas lands described as Section 27,
Township 42, Range 3, West 4 Meridian in the Province of Alberta, Canada.  There are currently 10
wells situated on the property of which five are producing oil wells and one is a formation water disposal
well.  Harbour Petroleum Company Limited initially drilled the wells and operatorship has been
transferred to Talisman Energy Inc.

The property is located approximately 120 miles east of Edmonton, Alberta.  The property has been on
continuous production since 1994.  In 1994, Talisman Energy Inc. became the operator and placed the
five producing wells on stream.  The wells cumulatively produce approximately 40 barrels of oil per day
generating approximately CDN$850 per month as our royalty.  The producing wells are identified as:

Harbour Talisman Chauvs
      10-27-42-3W4MHarbour Talisman Chauvs
      11-27-42-3W4MHarbour Talisman Chauvs
      14b-27-42-3W4MHarbour Talisman Chauvs
      14d-27-42-3W4MHarbour Talisman Chauvs
      15-27-42-3W4M




Geology in the area of our royalty interest

The Sparky Formation is a shallow water deltaic to offshore bar sequence of clastic sediments deposited
into a regressive Lower Cretaceous Boreal sea.  The Formation is one of seven distinct units of the Upper
Mannville group that constitutes regressive and transgressive marine incursions into the mid continent
from the northern Boreal sea of the Cretaceous Age.  The source of sediments for the Sparky Formation
is the Canadian Shield and the Western Cordillera.  The Sparky is underlain by the coal sequence of the
general petroleum formation and capped by the sparky coal unit.

In the area of our royalty interest the Sparky is 20-30 metres (65-100 feet) in thickness with reservoir net
pay approaching 10 metres (35 feet).  The oil is deemed to be heavy with an API ranging from 20 to 26
degrees.  The main reservoir is a well-sorted quartzose siltstone/sandstone unit.

Hydrocarbons are entrapped by stratigraphic limitations pinching out to the structurally up dip (north
east) direction.  Occasionally the reservoir sands are truncated by post depositional channel cuts of the
next sequence of continental transgression into the seaway.



**Item 3.  Legal Proceedings**



We are not a party to any legal proceedings.



**Item 4.  Submission of Matters to a Vote of Security Holders**



The Company's 2002 annual general meeting is scheduled to be held on Monday, December 2, 2002 at
Suite 1000, 409 Granville Street, Vancouver, British Columbia at 10:00 a.m.  The Company's security
holders will be requested to elect new directors, to appoint the Company's auditors for the 2002/2003
fiscal year and to ratify all actions taken by the officers and directors of the Company the preceding year.
No other business is expected to be brought before the Company's shareholders at the 2002 annual
general meeting.  The Company's notice of annual general meeting, Schedule 14A proxy statement and
proxy are being filed separately and are incorporated herein by reference.



**PART II**



**Item 5.  Market for Common Equity and Related Stockholder Matters**



As of the Company's fiscal year end, July 31, 2002, the Company's shares were not listed on any
exchange or quotation system.  On September 27, 2002, the Company was advised that its shares have
been cleared to trade on the NASD OTC Bulletin Board.



There are approximately 47 shareholders holding 2,650,000 of our issued common shares.  There are no
options and warrants to purchase additional common shares of the Company.



The Company does not expect to pay a dividend on its common stock in the foreseeable future. Payment
of dividends in the future will depend on the Company's earnings and its cash requirements at that time.



**Item 6.  Plan of Operation**

Geophysical Data Audit

We commenced the initial stage of our business plan in June, 2001.  We are examining suitable trade
geophysical data available in the immediate vicinity of our current royalty interest.  Our examination of
trade data brokers' inventory will determine the geographic location, age and parameters of existing data
with a view to acquiring and re-processing suitable data.  The study is anticipated to take approximately
60 days and acquisition and processing will take an additional 30 days.  The activity of data acquisition
involves our company reviewing currently available seismic data for quality and technical merit and
purchasing that geophysical data in the geographic area of our proposed activity.  This data is recorded
digitally and can be manipulated through the application of various filters and processes which clarify the
data from extraneous seismic noise.  This constitutes reprocessing seismic data.  This activity is
conducted by geophysicists with specialized training.

The estimated costs of this initial program are:

Data Acquisition - 20 kilometers (12.5 miles) @ $260 per kilometer:
      $5,200Re-processing - @ $194 per kilometer:
      $3,880Consultant - Identification and monitoring reprocessing@ $325 per day for 10 days:
      $  3,250Total:
      $12,330




Geophysical Acquisition Programme

The initial geophysical audit programme will identify selected areas that require specific data acquisition
to define drilling targets.  The programme may be structured as a geophysical farm-in with a drilling
option or we may elect to acquire the data on open Crown Lands.  In the first case we will contract with
property owners or the owners of hydrocarbon rights to allow us to acquire data in exchange for an
option to drill on the subject lands if our geophysical data defines a prospective drilling target.  In the
second case, we would acquire the proprietary data with a view to requesting the Province of Alberta to
post the lands for public auction.  In either case we would secure the optimum drilling locations.  If our
company pursues a geophysical farm-in, it means that we have negotiated the rights to petroleum and
natural gas lands by acquiring geophysical data over lands currently owned by a third party.  The
negotiations involve offering the third party the acquired geophysical data at no cost in return for the
exclusive right to drill a well on the petroleum and natural gas lands in order to earn a portion of the
petroleum and natural gas rights.  If petroleum and natural gas rights over certain lands have not been
leased by the government to oil and gas companies, those lands are considered to be open lands.  In this
case, there are no parties to negotiate farm-ins with as the petroleum and natural gas rights over open
lands are available only through government run auctions.

Management of the Company is working on our phase one exploration program having acquired a library
of available geophysical data in our area of interest.  Management expects to identify which data it will
acquire and re-process before the end of calendar 2002.  Our phase two geophysical acquisition program
is currently scheduled for the spring of 2003.

The estimated costs of a geophysical exploration programme are:

Permitting and Right of Way @ $970 per kilometer-10 kilometers:
      $9,700Acquisition @ $1,290 per kilometer:
      $12,900Processing and Interpretation:
      $ 4,500Total:
      $27,100




Drilling Option

We currently do not have the funds necessary to pursue a drilling program following our first two phases.
However, in the event drill targets are identified and we are able to raise funding independently or
through industry partners, we would consider the following options.

We would use our geophysical audit and acquisition data as an enticement to lessors of mineral rights to
trade our data for the right to drill an earning well on the petroleum and natural gas rights at no additional
cost to the lessor.  We would seek to recover our drilling cost from the sale of the first hydrocarbons and
after recovery of these costs share in future development and profits at the negotiated rates.

Alternatively, should our geophysical acquisition delineate a drilling target on open Crown lands, we
would place a bid to acquire a lease to the lands at a regulated open auction.  Current land prices vary
from $400 to $1500 dollars per acre and the size of the offered lands could be as high as 640 acres.  In
this scenario the Company would not share the interest in the mineral rights with third parties.

Drilling option scenario costs are:

Drilling one well to a depth of 750
metres:
      $162,000Total:
      $162,000




Land acquisition scenario costs are:

Acquiring 640 acres @ $645 per acre:
      $412,800Drilling costs per well @ eight wells:
      $1,296,000Total:
      $1,708,800




**Item 7.  Financial Statements**



Our audited financial statements for the fiscal year ended July 31, 2002 are included as part of this Form
10KSB following the signature page of this Form 10KSB.

**Item 8.  Changes in and Disagreements With Accountants on Accounting and Financial Disclosure**



There have been no changes in or disagreements with our accountants on any accounting and financial
disclosure for the fiscal year ended July 31, 2002.



**PART III**



**Item 9.  Directors, Executive Officers, Promoters and Control Persons;**

**Compliance with Section 16(a) of the Exchange Act.**



Biographical Information on our Officers and Directors:

**N. DESMOND SMITH** was appointed to his positions on March 23, 2001.  Mr. Smith devotes his time
to our company on an as needed basis which he expects to be approximately 20 hours per month initially.
Mr. Smith is a professional geologist, B.Sc. (Honors) Geology, University of British Columbia, 1975.
Mr. Smith has 26 years experience in oil and gas exploration development including positions as
geologist with Hudson Bay Oil and Gas Company Limited and Canada City Services Ltd.  Mr. Smith was
also a senior geologist with Harbour Petroleum Company Limited.  In 1981, Mr. Smith co-founded Tai
Resources Ltd. for which he acted as director and president until 1994.  Under Mr. Smith's direction, Tai
Energy completed equity financings totaling approximately $12 million and increased its portfolio of
petroleum and natural gas assets to a point, which qualified the company for a listing on the Toronto
Stock Exchange in 1993.  Tai Energy was the subject of a friendly takeover bid by Maxx Petroleum in
1994.  Following the takeover, Mr. Smith accepted a consulting position as chief operating officer of
Commonwealth Oil & Gas Company Limited.  Mr. Smith remained with Commonwealth Oil & Gas
Company Limited from 1995 to 2000 during which time he co-negotiated the first onshore exploration,
development and production sharing agreement in the Republic of Azerbaijan.  During this period of
time, Commonwealth's parent company was successful in raising equity financing of over $17 million.
From 2000 to the present, Mr. Smith has worked with Texas T Resources Inc. and Nostra Terra
(Overseas) Ltd. in the positions of director/president and manager respectively.  Mr. Smith's chief
responsibilities with these companies has been to co-ordinate the exploration, development and
production of hydrocarbons by consulting geologists and geophysicists.

There are no family relationships among the directors or executive officers of the Company.

No director or executive officer of ours has been a director or executive officer of any business which has
filed a bankruptcy petition or had a bankruptcy petition filed against it.  No director or executive officer
of ours has been convicted of a criminal offence or is the subject of a pending criminal proceeding.  No
director or executive officer of ours has been the subject of any order, judgment or decree of any court
permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any
type of business, securities or banking activities.

No director or officer of ours has been found by a court to have violated a federal or state securities or
commodities law.



**Item 10.  Executive Compensation**



Compensation received by officers, directors, and management personnel will be determined from time
to time by our Board of Directors.  Officers, directors, and management personnel will be reimbursed for
any out-of-pocket expenses incurred on our behalf.

Other than as described above, none of our directors or officers receive any other compensation for their
services.  The salaries shown in the following table are for the fiscal year ending July 31, 2002.

|**SUMMARY COMPENSATION TABLE**     
|-----------------------------------
|****                               
|                                   
|(a)                                
|Name and Principle
Position        
|N. Desmond Smith,President/Director
|Keith Ebert,Director               



**Item 11.  Security Ownership of Certain Beneficial Owners and Management**



The following table provides information regarding the beneficial ownership of our common stock as of
July 31, 2002 by:

*	each person or entity known by us to be the beneficial owner of more than 5% of the
outstanding shares of common stock,

*	each of our directors and named executive officers, and

*	all of our directors and executive officers as a group.

|**Title of Class**              | **Name and Address****of Beneficial Owner**                            | **Amount and Nature****of Beneficial Owner**                  | **Percent****of Class**
|------------------------------- | ---------------------------------------------------------------------- | ------------------------------------------------------------- | -----------------------
|****$.001 Par ValueCommon Stock | Keith A. EbertSuite 29011201 Marinaside CrescentVancouver, B.C.V6Z 2V2 | 250,000 common sharesDirect Ownership                         | 9.43%                  
|$.001 Par ValueCommon Stock     | N. Desmond Smith2106 - 33rd Avenue S.W.Calgary, Alberta   T2T 1Z0      | President and Director100,000 common sharesDirector Ownership | 3.77%                  
|$.001 Par ValueCommon Stock     | Management as a GroupOne Director and Officer                          | 100,000 common shares                                         | 3.77%                  



Beneficial ownership is determined in accordance with the rules of the Securities and Exchange
Commission and generally includes voting or investment power with respect to securities.  Shares of our
common stock which may be acquired upon exercise of stock options or warrants which are currently
exercisable or which become exercisable within 60 days of the date of the table are deemed beneficially
owned by the optionees.  Subject to community property laws, the persons or entities named in the table
above have sole voting and investment power with respect to all shares indicated as beneficially owned
by them.

Changes in Control.  We are not aware of any arrangements which may result in "changes in control" as
that term is defined by the provisions of Item 403(c) of Regulation S-B.



**Item 12.  Certain Relationships and Related Transactions**



We issued 2,250,000 common shares at a deemed price of $0.001 per share to Mr. Keith Ebert on
November 1, 1999.  Mr. Ebert was issued these shares in consideration for his services in organizing our
company, acting as a director and officer and building our business plan.  Mr. Ebert is a former officer
and director of the Company.  On June 1, 2002, Mr. Ebert returned the 2,250,000 common shares to the
Company's treasury for cancellation.

On February 14, 2001, we issued Mr. N. Desmond Smith 100,000 common shares at a deemed price of
$0.50 per share in consideration for our 2% gross overriding royalty on Edgerton "27".  The deemed
value of this acquisition was $50,000.  This acquisition was done at arm's length.  Mr. Smith was
subsequently appointed President, C.F.O. and Secretary of our company on March 23, 2001.

We have no policy with respect to entering into transactions with members of management or affiliated
companies.  Any non arm's length transaction we consider will be reviewed and voted on by disinterested
members of our board of directors.



**Item 13.  Exhibits, List and Reports on Form 8-K.**



(A)	Exhibits

|**Exhibit****Number** | ****
Description                                                                                                                                                   
|--------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|****3.1               | Articles of Incorporation filed October 29, 1999, as filed with the Issuer's Form 10-SB (file no. 0-32523) filed on April 9, 2001 incorporated herein by reference.
|3.2                   | Bylaws as filed with the Issuer's Form 10-SB (file no. 0-32523) on April 9, 2001, incorporated herein
by reference.                                                
|13.1                  | Form 10QSB for the three months ended October 31, 2001, filed on December 12, 2001, incorporated
herein by reference.                                              
|13.2                  | Form 10QSB for the six months ended January 31, 2002, filed on March 13, 2002, incorporated herein
by reference.                                                   
|13.3                  | Form 10QSB for the nine months ended April 30, 2002, filed on June 13, 2002, incorporated herein by
reference.                                                     
|99.1                  | Certification of Disclosure by the Company's Chief Executive Officer/Chief Financial
Officer                                                                       



(B)	Reports on Form 8-K

We filed a Form 8K on September 13, 2001 changing our fiscal year end from October 31 to July 31.

**SIGNATURES**

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

**LIONS GATE INVESTMENT LIMITED**

Dated:  October 25, 2002		Per:	/s/N. Desmond Smith

N. Desmond Smith, President, C.F.O. and Director

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



/s/N. Desmond Smith

N. Desmond Smith, President, C.F.O. and Director



October 25, 2002

Date





**LIONS GATE INVESTMENT LIMITED**

**(A Development Stage Company)**

**FINANCIAL STATEMENTS**

**(Expressed in U.S. Dollars)**

**JULY 31, 2002**

Davidson & Company - Chartered
Accountants

**INDEPENDENT AUDITORS' REPORT**

To the Board of Directors and Stockholders of

Lions Gate Investment Limited

(A Development Stage Company)

We have audited the balance sheets of Lions Gate Investment Limited (A Development Stage Company) as at July 31, 2002
and 2001 and the related statements of operations, stockholders' equity and cash flows for the years then ended and the
cumulative amounts from incorporation on October 29, 1999 to July 31, 2002.  These financial statements are the
responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with United States generally accepted auditing standards.  Those standards require
that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at
July 31, 2002 and 2001 and the results of its operations and its cash flows for the years then ended and the cumulative
amounts from incorporation on October 29, 1999 to July 31, 2002 in accordance with United States generally accepted
accounting principles.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern.  As
discussed in Note 2 to the financial statements, the Company has no established source of revenue.  This raises substantial
doubt about its ability to continue as a going concern.  Management's plan in regard to these matters are also described in
Note 2.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

**"DAVIDSON & COMPANY"**

|Vancouver, Canada | Chartered Accountants
|----------------- | ---------------------
|                  |                      
|October 10, 2002  |                      

A Member of*****SC**INTERNATIONAL***



**LIONS GATE INVESTMENT LIMITED**

(A Development Stage Company)

BALANCE SHEETS

(Expressed in U.S. dollars)

AS AT JULY 31

|                                                 | 2002                                           | 2001    
|------------------------------------------------ | ---------------------------------------------- | --------
|                                                 |                                                |         
|                                                 |                                                |         
|                                                 |                                                |         
|**ASSETS**                                       | ****                                           |         
|                                                 |                                                |         
|******Current**                                  | ****                                           |         
|Cash                                             | $	33,627                                       | $	45,432
|****Royalty income receivable                    | 2,667                                          | 1,565   
|                                                 |                                                |         
|Total current assets                             | 36,294                                         | 46,997  
|                                                 |                                                |         
|**Royalty interest** (Note 4)                    | 1                                              | 50,000  
|                                                 |                                                |         
|                                                 | ****$	36,295                                   | $	96,997
|                                                 |                                                |         
|                                                 |                                                |         
|                                                 |                                                |         
|**LIABILITIES AND STOCKHOLDERS' EQUITY**         |                                                |         
|                                                 |                                                |         
|**Current**                                      | ****                                           |         
|****	Accounts payable and accrued liabilities    | $	1,850                                        | $	1,500 
|                                                 |                                                |         
|**Stockholders' equity**                         |                                                |         
|Capital stock (Note 5)                           |                                                |         
|Authorized                                       |                                                |         
|100,000,000                                      | common shares with a par value of $0.0001      |         
|Issued                                           |                                                |         
|2,650,000                                        | common shares (2001 - 4,900,000 common shares) | 265     
|Additional paid-in capital                       | 104,435                                        | 104,210 
|Deficit accumulated during the development stage | (70,255)                                       | (9,203) 
|                                                 |                                                |         
|                                                 | 34,445                                         | 95,497  
|                                                 |                                                |         
|                                                 | $	36,295                                       | $	96,997



**History and organization of the Company** (Note 1)

**Going concern** (Note 2)

|**On behalf of the Board:** | ****     |  | 
|--------------------------- | -------- |  | 
|                            |          |  | 
|                            |          |  | 
|                            |          |  | 
|/s/N. Desmond Smith,        | Director |  | 
|N. Desmond Smith            |          |  | 



The accompanying notes are an integral part of these financial statements.

**LIONS GATE INVESTMENT LIMITED**

(A Development Stage Company)

STATEMENTS OF OPERATIONS

(Expressed in U.S. dollars)

|                                               | Period FromIncorporationonOctober 29,1999 toJuly 31,2002 | Year EndedJuly 31,2002 | Year EndedJuly 31,2001
|---------------------------------------------- | -------------------------------------------------------- | ---------------------- | ----------------------
|                                               |                                                          |                        |                       
|                                               |                                                          |                        |                       
|                                               |                                                          |                        |                       
|**EXPENSES**                                   |                                                          |                        |                       
|Consulting fees                                | $	6,917                                                  | $	3,917                | $	3,000               
|Filing and transfer agent fees                 | 3,680                                                    | 3,085                  | 595                   
|Office and miscellaneous                       | 2,865                                                    | 507                    | 120                   
|Professional fees                              | 12,832                                                   | 7,650                  | 2,682                 
|Write-down of royalty interest (Note 4)        | 49,999                                                   | 49,999                 | -                     
|                                               |                                                          |                        |                       
|                                               |                                                          |                        |                       
|                                               | (76,293)                                                 | (65,158)               | (6,397)               
|                                               |                                                          |                        |                       
|                                               |                                                          |                        |                       
|**OTHER ITEM**                                 | ****                                                     |                        |                       
|Royalty revenue                                | 6,038                                                    | 4,106                  | 1,932                 
|                                               |                                                          |                        |                       
|                                               |                                                          |                        |                       
|**Loss for the period**                        | $	(70,255)                                               | $	(61,052)             | $	(4,465)             
|                                               |                                                          |                        |                       
|                                               |                                                          |                        |                       
|**Basic and diluted loss per common share**    |                                                          | $	(0.01)               | $	(0.01)              
|                                               |                                                          |                        |                       
|                                               |                                                          |                        |                       
|**Weighted average common shares outstanding** |                                                          | 4,536,301              | 4,791,507             



The accompanying notes are an integral part of these financial statements.

**LIONS GATE INVESTMENT LIMITED**

(A Development Stage Company)

STATEMENT OF STOCKHOLDERS' EQUITY

(Expressed in U.S. dollars)

|                                 | Common Stock   | AdditionalPaid-in | DeficitAccumulatedDuring theDevelopment | TotalStockholders'
|-------------------------------- | -------------- | ----------------- | --------------------------------------- | ------------------
|                                 | Shares         | Amount            | Capital                                 | Stage             
|                                 |                |                   |                                         |                   
|                                 |                |                   |                                         |                   
|                                 |                |                   |                                         |                   
|**Balance, October 29, 1999**    | ****	-         | $-                | $-                                      | $-                
|                                 |                |                   |                                         |                   
|Common shares issuedfor services | 2,250,000      | 225               | 2,025                                   | -                 
|                                 |                |                   |                                         |                   
|Common shares issued for cash    | 2,450,000      | 245               | 2,205                                   | -                 
|                                 |                |                   |                                         |                   
|Loss for the period              | -              | -                 | -                                       | (4,738)           
|                                 |                |                   |                                         |                   
|**Balance, July 31, 2000**       | ****	4,700,000 | 470               | 4,230                                   | (4,738)           
|                                 |                |                   |                                         |                   
|Private placement                | 100,000        | 10                | 49,990                                  | -                 
|                                 |                |                   |                                         |                   
|Acquisition of royalty interest  | 100,000        | 10                | 49,990                                  | -                 
|                                 |                |                   |                                         |                   
|Loss for the year                | -              | -                 | -                                       | (4,465)           
|                                 |                |                   |                                         |                   
|**Balance, July 31, 2001**       | ****	4,900,000 | 490               | 104,210                                 | (9,203)           
|                                 |                |                   |                                         |                   
|Return to treasury               | (2,250,000)    | (225)             | 225                                     | -                 
|                                 |                |                   |                                         |                   
|Loss for the year                | -              | -                 | -                                       | (61,052)          
|                                 |                |                   |                                         |                   
|**Balance, July 31, 2002**       | ****	2,650,000 | $265              | $104,435                                | $(70,255)         



The accompanying notes are an integral part of these financial statements.

**LIONS GATE INVESTMENT LIMITED**

(A Development Stage Company)

STATEMENTS OF CASH FLOWS

(Expressed in U.S. dollars)

|                                                                                    | Period FromIncorporationonOctober 29,1999 toJuly 31,2002 | Year EndedJuly 31,2002 | Year EndedJuly 31,2001
|----------------------------------------------------------------------------------- | -------------------------------------------------------- | ---------------------- | ----------------------
|                                                                                    |                                                          |                        |                       
|                                                                                    |                                                          |                        |                       
|                                                                                    |                                                          |                        |                       
|**CASH FLOWS FROM OPERATING ACTIVITIES**                                            |                                                          |                        |                       
|Loss for the period                                                                 | $	(70,255)                                               | $	(61,052)             | $	(4,465)             
|Items not affecting cash:                                                           |                                                          |                        |                       
|Common shares issued for services                                                   | 2,250                                                    | -                      | -                     
|Write-down of royalty interest                                                      | 49,999                                                   | 49,999                 | -                     
|                                                                                    |                                                          |                        |                       
|Changes in non-cash working capital items:                                          |                                                          |                        |                       
|Increase in royalty income receivable                                               | (2,667)                                                  | (1,102)                | (1,565)               
|Increase (decrease) in accounts payable and accrued liabilities                     | 1,850                                                    | 350                    | (1,000)               
|                                                                                    |                                                          |                        |                       
|****	Net cash used in operating activities                                          | (18,823)                                                 | (11,805)               | (7,030)               
|                                                                                    |                                                          |                        |                       
|                                                                                    |                                                          |                        |                       
|**CASH FLOWS FROM FINANCING ACTIVITIES**                                            |                                                          |                        |                       
|****	Issuance of shares                                                             | 52,450                                                   | -                      | 50,000                
|                                                                                    |                                                          |                        |                       
|****	Net cash provided by financing activities                                      | 52,450                                                   | -                      | 50,000                
|                                                                                    |                                                          |                        |                       
|                                                                                    |                                                          |                        |                       
|**Change in cash position during the period**                                       | 33,627                                                   | (11,805)               | 42,970                
|                                                                                    |                                                          |                        |                       
|                                                                                    |                                                          |                        |                       
|**Cash position, beginning of the period**                                          | -                                                        | 45,432                 | 2,462                 
|                                                                                    |                                                          |                        |                       
|                                                                                    |                                                          |                        |                       
|**Cash position, end of the period**                                                | $	33,627                                                 | $	33,627               | $	45,432              
|                                                                                    |                                                          |                        |                       
|                                                                                    |                                                          |                        |                       
|**Supplemental disclosure with respect to cash flows:**                             |                                                          |                        |                       
|****	Cash paid for income taxes                                                     | $	-                                                      | $	-                    | $	-                   
|****	Cash paid for interest                                                         | -                                                        | -                      | -                     
|                                                                                    |                                                          |                        |                       
|                                                                                    |                                                          |                        |                       
|**Supplemental disclosure of non-cash investing,****and** **financing activities:** |                                                          |                        |                       
|****	Common shares issued for services                                              | $	2,250                                                  | $	-                    | $	-                   
|****	Common shares issued for royalty interest                                      | 50,000                                                   | -                      | 50,000                



The accompanying notes are an integral part of these financial statements.

**LIONS GATE INVESTMENT LIMITED**

(A Development Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

(Expressed in U.S. dollars)

JULY 31, 2002



**1.	HISTORY AND ORGANIZATION OF THE COMPANY**

The Company was incorporated on October 29, 1999 under the laws of Nevada to engage in any lawful business or
activity for which corporations may be organized under the laws of the State of Nevada.  In accordance with
Statement of Financial Accounting Standards No. 7 "Accounting and Reporting by Development Stage
Enterprises", the Company is deemed to be in the Development Stage.  The Company is in the business of earning
royalty income on oil and gas properties.  During the year ended July 31, 2001, the Company issued 100,000
common shares at an agreed value of $50,000 to acquire a 2% gross overriding royalty interest on oil and gas
production (Note 4).

**2.	GOING CONCERN**

The Company's financial statements are prepared using the generally accepted accounting principles of the United
States of America applicable to a going concern, which contemplates the realization of assets and liquidation of
liabilities in the normal course of business.  However, to date the Company has received minimal royalty revenue.
Without realization of additional capital, or additional sources of revenue, it would be unlikely for the Company to
continue as a going concern.   The Company's management plans on advancing funds on an as needed basis and in
the longer term, deriving cash from revenue from the operations.  The Company's ability to continue as a going
concern is dependent on these additional management advances, and, ultimately, upon achieving profitable
operations.

|                | 2002       | 2001     
|--------------- | ---------- | ---------
|                |            |          
|Deficit         | $	(70,255) | $	(9,203)
|Working capital | 34,444     | 45,497   



**3.	SIGNIFICANT ACCOUNTING POLICIES**

**Use of estimates**

The preparation of financial statements in conformity with generally accepted accounting principles of the United
States of America requires management to make estimates and assumptions that affect the reported amount of assets
and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amount of revenues and expenses during the period.  Actual results could differ from these estimates.

**Revenue recognition**

Royalty income is recorded in the period earned.

**LIONS GATE INVESTMENT LIMITED**

(A Development Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

(Expressed in U.S. dollars)

JULY 31, 2002



**3.	SIGNIFICANT ACCOUNTING POLICIES** (cont'd)

**Amortization and impairment**

Amortization of the cost of the Company's royalty interest will be computed using the units of production method
primarily on a separate-property basis using proved reserves as estimated annually by an independent petroleum
engineer.

In accordance with the provisions of Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets," the Company recognizes impairment losses for long-lived
assets when indicators of impairment are present and the undiscounted cash flows are not sufficient to recover the
assets' carrying amount.  The impairment loss is measured by comparing the fair value of the asset to its carrying
amount.  Fair values are based on discounted future cash flows.  The Company's royalty interest was reviewed for
indicators of impairment resulting in no recognition of impairment provisions for the period ended July 31, 2002.

**Income taxes**

Income taxes are provided in accordance with SFAS No. 109, "Accounting for Income Taxes".  A deferred tax asset
or liability is recorded for all temporary differences between financial and tax reporting and net operating loss
carryforwards.  Deferred tax expenses (benefit) result from the net change during the year of deferred tax assets and
liabilities.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than
not that some portion or all of the deferred tax assets will not be realized.  Deferred tax assets and liabilities are
adjusted for the effects of changes in tax laws and rates on the date of enactment.

**New accounting pronouncements**

In June, 2001, the Financial Accounting Standards Board ("FASB") approved the issuance of Statement of
Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets".  SFAS No. 142
addresses the accounting for all purchased intangible assets, but not the accounting for internally developed
intangible assets.  Goodwill will no longer be amortized but will be reviewed for impairment in accordance with
SFAS No. 142.  SFAS No. 142 is effective for fiscal years beginning after December 15, 2001.  Early adoption is
permitted for entities with fiscal years beginning after March 15, 2001.

In July 2001, FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations" that records the fair
value of the liability for closure and removal costs associated with the legal obligations upon retirement or removal
of any tangible long-lived assets.  The initial recognition of the liability will be capitalized as part of the asset cost
and depreciated over its estimated useful life.  SFAS 143 is required to be adopted effective January 1, 2003.

In August 2001, FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets"
that supersedes SFAS No. 121 "Accounting for the Impairment or Disposal of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."  SFAS No. 144 is required to be adopted effective January 1, 2002.

**LIONS GATE INVESTMENT LIMITED**

(A Development Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

(Expressed in U.S. dollars)

JULY 31, 2002



**3.	SIGNIFICANT ACCOUNTING POLICIES** (cont'd)

**New accounting pronouncements (cont'd)**

In April 2002, FASB issued No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB
Statement No. 13, and Technical Corrections".  SFAS No. 145 eliminates the requirement that gains and losses from
the extinguishment of debt be aggregated and, if material, classified as an extraordinary item, net of the related
income tax effect and eliminates an inconsistency between the accounting for sale-leaseback transactions and
certain lease modifications that have economic effects that are similar to sale-leaseback transactions. Generally,
SFAS No. 145 is effective for transactions occurring after May 15, 2002.

In June 2002, the FASB issued SFAS No. 146 "Accounting for Costs Associated with Exit or Disposal Activities"
that nullifies Emerging Issues Task Force Issue No. 94-3 ("EITF Issue 94-3") "Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity (Including Certain Costs Incurred in a
Restructuring)".  SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be
recognized when the liability is incurred, whereby EITF Issue 94-3 had recognized the liability at the commitment
date to an exit plan.  The provisions of this statement are effective for exit or disposal activities that are initiated
after December 31, 2002 with earlier application encouraged.

The adoption of these new pronouncements is not expected to have a material effect on the Company's financial
position or results of operations.

**Loss per share**

Under SFAS No. 128 "Earnings Per Share", basic and diluted earnings per share are to be presented.  Basic
earnings per share is computed by dividing income available to common shareholders by the weighted average
number of common shares outstanding during the year.  Diluted earnings per share takes into consideration common
shares outstanding (computed under basic earnings per share) and potentially dilutive common shares.

**4.	ROYALTY INTEREST**

|                 |  |  | 2002     | 2001    
|---------------- |  |  | -------- | --------
|                 |  |  |          |         
|Royalty interest |  |  | $	50,000 | $	50,000



**Edgerton, Alberta**

During fiscal 2001, the Company issued 100,000 common shares with an agreed value of $50,000 to acquire a 2%
gross overriding royalty interest over certain petroleum producing lands in the Province of Alberta, Canada known
as Edgerton "27", TWP 42, RGE 3, W4M, Section 27 granted by Harbour Petroleum Company Limited.

**LIONS GATE INVESTMENT LIMITED**

(A Development Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

(Expressed in U.S. dollars)

JULY 31, 2002



**4.	ROYALTY INTEREST** (cont'd)

**Edgerton, Alberta** (cont'd)

During the current year, management of the Company determined there to be an impairment in the carrying value of
the royalty interest and as a result, wrote down its investment.

**5.	CAPITAL STOCK**

On November 1, 1999, the Company issued 2,450,000 of its common shares for proceeds of $2,450 and issued
2,250,000 of its common shares at an agreed value of $2,250 for services rendered.

On February 14, 2001, the Company completed a private placement of 100,000 common shares for proceeds of
$50,000.

On February 14, 2001, the Company issued 100,000 common shares with a par value of $0.0001 for an agreed value
of $50,000 for acquisition of a royalty interest (Note 4).

On January 1, 2002, a director of the Company returned 2,250,000 common shares with a par value of $0.001 to
treasury for cancellation.

**Common shares**

The common shares of the Company are all of the same class, are voting and entitle stockholders to receive
dividends.  Upon liquidation or wind-up, stockholders are entitled to participate equally with respect to any
distribution of net assets or any dividends which may be declared.

**Additional paid-in capital**

The excess of proceeds received for shares of common stock over their par value of $0.0001, less share issue costs,
is credited to additional paid-in capital.

**6.	INCOME TAXES**

The Company's total deferred tax asset is as follows:

|                                               | 2002     | 2001   
|---------------------------------------------- | -------- | -------
|                                               |          |        
|Tax benefit of net operating loss carryforward | $	24,000 | $	3,220
|Valuation allowance                            | (24,000) | (3,220)
|                                               |          |        
|                                               | $	-      | $	-    



**LIONS GATE INVESTMENT LIMITED**

(A Development Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

(Expressed in U.S. dollars)

JULY 31, 2002



**6.	INCOME TAXES** (cont'd)

The Company has a net operating loss carryforward of approximately $70,000, which if not used, will begin to
expire in the year 2018.  The Company has provided a full valuation allowance on the deferred tax asset because of
the uncertainty regarding realizability.

**7.	FINANCIAL INSTRUMENTS**

The Company's financial instruments consist of cash, royalty income receivable, accounts payable and accrued
liabilities.  Unless otherwise noted, it is management's opinion that the Company is not exposed to significant
interest, currency or credit risks arising from these financial instruments.  The fair value of these financial
instruments approximate their carrying values, unless otherwise noted.