KL Energy Corporation announced that it has successfully completed the first phase of the work program under the joint development agreement ("JDA") with Petrobras America, Inc. signed on August 23, 2010. All cellulosic ethanol produced from sugarcane bagasse in KLE's demonstration plant in 2011 has been shipped to Petrobras SA ("Petrobras") in Brazil. KLE recorded the first cellulosic ethanol RIN credits issued by the Environmental Protection Agency ("EPA"). Having met all technology milestones and ethanol production targets, Petrobras and KLE decided to extend the scope of the JDA. Under the terms of the extended JDA, KLE upgraded its demonstration plant, expanded production process validations and added on-site yeast production capabilities. The plant now represents the design of future commercial plants, with one tenth of the planned capacity, engineered for integration with Brazilian sugarcane mills. Throughout most of the balance of 2012, KLE will process sugarcane bagasse into fuel spec ethanol.