but probably never will

Reg Technologies Inc.'s "revolutionary" rotary engine has been running on hot air for more than two decades.

The hot air has been provided by John G. Robertson, president and controlling shareholder of the Richmond-based company, which trades on the TSX Venture Exchange.

Since 1988, Robertson has been pitching his engine technology for everything from weed trimmers to military jet engines.

"The building of the Rand cam-engine has commenced and will be completed in less than 90 days," he said in a July 1988 release.

Nothing came of that.

"The final assembling and testing of the Rand cam-engine is nearing completion," he said in December 1990.

Nothing came of that.

"Reg and a Fortune 500 company -- a major defense contractor involved in aerospace and military work for the department of defense in the U.S. -- are negotiating a joint development license . . . primarily for defense applications," he said in October 1993.

Nothing came of that, either.

In 1994, Robertson set up a U.S. subsidiary, REGI U.S. Inc., which would pay for 50 per cent of development costs in exchange for U.S. rights to the technology. (The stock trades on the OTC Bulletin Board in the United States.)

Robertson hired a variety of investor relations firms and newsletter writers to hype the stock of both companies.

"After years of intensive research and development, REGI U.S. Inc. is in the final testing stages prior to actual manufacture and/or licensing of its revolutionary rotary engine," the Bull & Bear Financial Report trumpeted in January 2006.

In January 2007, the newsletter noted Khandaker Partners of New York had set a target price of $13.73 US for REGI stock during the next 18 to 24 months.

The newsletter described Khandaker as an "independent research and advisory firm," but in fact, REGI paid the firm to prepare the report, which explains its ridiculously bullish forecast. (The stock, which was trading at just over $1, has since slumped to 25 cents.)

Now 68, Robertson is still engaged in this dance of the seven veils. Just last week, he reported that Reg and REGI "are pleased to announce the release of drawings to start fabrication of a RadMax engine test rig."

"It's the penny stock promotion that never quits," says John Woods, editor of Canada Stockwatch, a Vancouver-based stock information service.

"Penny stocks usually have a life cycle of one to five years, not one to five decades."

All of this would be quite funny, except that it's costing shareholders a lot of money.

Neither Reg nor REGI has generated a cent of revenue. Reg's cumulative losses now exceed $14 million and REGI's are approaching $12 million US.

Furthermore, financial statements show these companies are not serious about developing the engine. During the past two fiscal years and the first three quarters of this year, Reg spent only $581,000 on research and development. During this same period, it spent $3.6 million on general and administrative expenses.

REGI similarly spent only $338,000 on R&D while spending $2.9 million on general and administrative expenses.

Robertson runs two other public companies out of his office that follow the same pattern.

Linux Gold Corp., a TSXV exploration company, has burned through more than $15 million in capital but has not generated any revenues and the book value of its assets is now less than $140,000.

Where does all the money go? During the nine months ending Nov. 2008, Linux's total expenses were $458,000, but only $61,702 of that amount was spent on exploration. Most was used for administration, including $102,971 on travel and promotion.

Ditto for Teryl Resources Corp., a TSXV oil and gas company. During the same nine-month period, it generated only $14,985 in revenue while spending $78,934 in management and directors fees; $15,565 in travel, auto and entertainment; and $86,218 in publicity, promotion and investor relations. Its cumulative losses now exceed $9.4 million.

Neither Robertson nor his wife, Suzanne (who serves as a director of Reg, Linux and Teryl) draw salaries, but their private company, SMR Investments Ltd., charges each of the four companies $2,500 per month for management services, which adds up to $120,000 per year.

Reg, Linux and Teryl also pay them rent at a marked-up price, as well as directors' fees and expenses, which, judging by the amount spent on travel and entertainment, are liberal.

And of course, they get lots of stock options.

With these business flops providing such a comfortable living, it's no wonder Robertson was not happy to hear my voice.

"It's been a challenging ordeal, and we are finally making it a success and you are coming around to destroy it," he said, referring to the rotary engine that could, but won't.

"For us to be going this far, we should be getting a medal."