The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the condensed financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under "Special Note Regarding Forward-Looking Statements," and elsewhere in this Annual Report on Form 10-K.

References in this report to "we," "us" or the "Company" refer to NewHold Investment Corp. II. References to our "management" or our "management team" refer to our officers and directors and references to the "Sponsor" refer to NewHold Industrial Technology Holdings LLC II, a Delaware limited liability company. The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the condensed financial statements and the notes thereto contained elsewhere in this report.





Overview

We are a blank check company incorporated on February 25, 2021 as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the "Initial Business Combination"). We intend to effectuate our Initial Business Combination using cash from the proceeds of our initial public offering that was completed in October 2021 (the "Public Offering") and the sale of warrants in a private placement (the "Private Placement") that occurred simultaneously with the completion of the Public Offering (the "Private Placement Warrants"), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing.

We have not selected any specific business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target. However, our management team had been actively in discussions with potential business combination partners in their capacity as officers of NewHold Investment Corp. ("NHIC I"), which completed its business combination with Evolv Technologies, Inc., a company specializing in artificial intelligence enabled touchless security screening, on July 19, 2021. Our management team may pursue business combination partners that had previously been in discussions with NHIC I's management team.

The issuance of additional shares in connection with an initial business combination to the owners of the target or other investors:





       ?   may significantly dilute the equity interest of investors in this
           offering, which dilution would increase if the anti-dilution provisions
           in the Class B common stock resulted in the issuance of Class A shares
           on a greater than one-to-one basis upon conversion of the Class B
           common stock;




       ?   may subordinate the rights of holders of our common stock if preferred
           stock is issued with rights senior to those afforded our common stock;




       ?   could cause a change in control if a substantial number of shares of
           our common stock is issued, which may affect, among other things, our
           ability to use our net operating loss carry forwards, if any, and could
           result in the resignation or removal of our present officers and
           directors;




       ?   may have the effect of delaying or preventing a change of control of us
           by diluting the stock ownership or voting rights of a person seeking to
           obtain control of us; and




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       ?   may adversely affect prevailing market prices for our Class A common
           stock and/or warrants.

Similarly, if we issue debt securities or otherwise incur significant debt to bank or other lenders or the owners of a target, it could result in:





       ?   default and foreclosure on our assets if our operating revenues after
           an initial business combination are insufficient to repay our debt
           obligations;




       ?   acceleration of our obligations to repay the indebtedness even if we
           make all principal and interest payments when due if we breach certain
           covenants that require the maintenance of certain financial ratios or
           reserves without a waiver or renegotiation of that covenant;




       ?   our immediate payment of all principal and accrued interest, if any, if
           the debt security is payable on demand;




       ?   our inability to obtain necessary additional financing if the debt
           security contains covenants restricting our ability to obtain such
           financing while the debt security is outstanding;




  ? our inability to pay dividends on our common stock;




       ?   using a substantial portion of our cash flow to pay principal and
           interest on our debt, which will reduce the funds available for
           dividends on our common stock if declared, our ability to pay expenses,
           make capital expenditures and acquisitions, and fund other general
           corporate purposes;




       ?   limitations on our flexibility in planning for and reacting to changes
           in our business and in the industry in which we operate;




       ?   increased vulnerability to adverse changes in general economic,
           industry and competitive conditions and adverse changes in government
           regulation;




       ?   limitations on our ability to borrow additional amounts for expenses,
           capital expenditures, acquisitions, debt service requirements, and
           execution of our strategy; and




       ?   other purposes and other disadvantages compared to our competitors who
           have less debt.

As indicated in the accompanying financial statements, at December 31, 2022, we had approximately $986,000 in cash, current liabilities of approximately $144,000 and a loss from operations for the ended December 31, 2022 of approximately $1,719,000. We expect to incur significant costs in the pursuit of an Initial Business Combination and we cannot assure you that our plans to complete an Initial Business Combination will be successful.

Results of Operations and Known Trends or Future Events

We have neither engaged in any operations nor generated any operating revenues to date. Our only activities from February 25, 2021 (inception) to December 31, 2022 were organizational activities, those necessary to prepare for the Public Offering and, after the Public Offering, efforts to identify a target company for a business combination. We do not expect to generate any operating revenues until after the completion of our Initial Business Combination. We generate non-operating income in the form of interest income on cash and investments held after the Public Offering. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.

For the year ended December 31, 2021 and for the period from February 25, 2021 (inception) through December 31, 2021, we had a net income (loss) of approximately $392,000 and ($413,000), respectively.





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For the year ended December 31, 2022 we had a loss from operations of approximately $1,719,000 consisting of approximately $619,000 for those legal, audit, reporting, insurance, listing and other costs associated with our being a public company as well as approximately $572,000 of consulting and travel costs associated with our search for a business combination partner, approximately $300,000 in administrative charges from our Sponsor and approximately $175,000 in franchise taxes. For the year ended December 31, 2022, the Company had non-operating income from investments in the Trust Account of approximately $2,586,000.

For the period from February 25, 2021 (inception) through December 31, 2021, we had a net loss of approximately $413,000, which resulted largely (approximately $152,000) from those legal, audit, reporting, insurance, listing and other costs associated with our being a public company subsequent to October 25, 2021, consultant and travel expenses associated with our search for a target company for a business combination of approximately $77,000 administrative fees of the Sponsor of approximately $56,000 and franchise taxes of approximately $144,000 net of interest income of approximately $16,000.

After Public Offering, we are incurring increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses. Our costs are likely to further increase when/if we locate a Business Combination target.

Liquidity and Capital Resources

In October 2021, we consummated the Public Offering of an aggregate of 19,490,000 Units (including the partial exercise of the underwriters' overallotment option) at a price of $10.00 per unit generating gross proceeds of approximately $194,900,000 before underwriting discounts and expenses. Simultaneously with the consummation of the Public Offering, we consummated the Private Placement of 9,254,705 Private Placement Warrants, each exercisable to purchase one share of our Class A common stock at $11.50 per share, to the Sponsor and certain funds and accounts managed by Magnetar Financial LLC, UBS O'Connor LLC, and Kepos Capital, L.P., at a price of $1.00 per Private Placement Warrant, generating gross proceeds, before expenses, of approximately $9,254,705.

The net proceeds from the Public Offering and Private Placement were approximately $199,622,000, net of the non-deferred portion of the underwriting commissions of $3,898,000 and offering costs and other expenses of approximately $635,000. $196,849,000 of the proceeds of the Public Offering and the Private Placement have been deposited into a trust account, with Continental Stock Transfer & Trust Company acting as trustee (the "Trust Account"), and are not available to us for operations (except amounts to pay taxes).

For the period from February 25, 2021 (inception) through December 31, 2021, largely subsequent to the Public Offering, we used approximately $907,000 in operating activities, generated approximately $199,728,000 of cash from financing activities and used approximately $196,849,000 in investing activities.

In the year ended December 31, 2022, the Company used approximately $1,967,000 of cash in operations and raised approximately $981,000 from withdrawals of interest income from the Trust Account to pay taxes. Our withdrawals from the Trust Account exceeded our interest income available to us resulting in our Class A common shares subject to redemption exceeding our balance in the Trust Account by approximately $72,000. This condition occurs largely due to the payment of estimated taxes in excess of actual required payments. This condition will self-correct in January 2023.

We intend to use substantially all of the funds held in the Trust account, including any amounts representing interest earned on the Trust Account (less taxes payable and deferred underwriting commissions), to complete our Initial Business Combination. We may withdraw interest income (if any) to pay income taxes, if any. Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the Trust Account. We do not expect the interest income earned on the amount in the Trust Account (if any) will be sufficient to pay our income and franchise taxes. To the extent that our equity or debt is used, in whole or in part, as consideration to complete our Initial Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.

Subsequent to our Public Offering and prior to the completion of our Initial Business Combination, we currently have available to us approximately $986,000 of proceeds held outside the Trust Account for working capital at December 31, 2022. We plan to use these funds primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a business combination, and to pay taxes to the extent the interest earned on the Trust Account is not sufficient to pay our taxes.





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Mandatory Liquidation, Liquidity and Going Concern

In connection with the Company's assessment of going concern considerations in accordance with ASU 2014-15, "Disclosures of Uncertainties about an Entity's Ability to Continue as a Going Concern," as of December 31, 2022, the Company has approximately $986,000 in cash and approximately $1,258,000 in working capital and management has determined that the Company's current liquidity is sufficient to fund the working capital needs of the Company until one year from the date of issuance of these financial statements. However, if the Company cannot complete a Business Combination prior to April 25, 2023 (or October 25, 2023 if certain conditions are met), it could be forced to wind up its operations and liquidate unless it receives an extension approval from its shareholders. This condition raises substantial doubt about the Company's ability to continue as a going concern for a period of time within one year after the date that the financial statements are issued. The Company's plan to deal with this uncertainty is to complete a Business Combination prior to April 25, 2023 or seek an extension approval from its shareholders. There is no assurance that the Company's plans to consummate a Business Combination will be successful or successful within the Combination Period. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We do not believe we will need to raise additional funds following our Public Offering in order to meet the expenditures required for operating our business. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination. Moreover, we may need to obtain additional financing either to complete our Initial Business Combination or because we become obligated to redeem a significant number of our public shares upon completion of our Initial Business Combination, in which case we may issue additional securities or incur debt in connection with such business combination.

Off-Balance Sheet Arrangements; Commitments and Contractual Obligations; Quarterly Results

We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.

We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered into any agreements for non-financial assets.





Contractual Obligations

In March 2021, our Sponsor agreed to loan us up to $300,000 to be used for a portion of the expenses of the Public Offering pursuant to a promissory note. Prior to the Public Offering we had borrowed approximately $85,000 under the promissory note. The note was non-interest bearing, unsecured and payable promptly after the earlier of the date on which the Company consummates an initial public offering or the date on which the Company determines not to conduct an initial public offering of its securities. On October 25, 2021, the Company repaid the outstanding balance under the promissory note and the Note is no longer available to the Company.

On October 25, 2021, the Company agreed to pay $25,000 a month for office space, utilities and secretarial and administrative support to the Sponsor. Services commenced on the date the securities were first listed on The Nasdaq Global Market and will terminate upon the earlier of the consummation by the Company of an initial Business Combination or the liquidation of the Company. The Company paid and charged to operations $300,000 and $75,000, respectively, for the year ended December 31, 2022 and for the period from February 25, 2021 (inception) to December 31, 2021, for these services and there were no amounts unpaid at those dates.

The Company paid an underwriting discount of 2.0% of the per Unit price to the underwriters, an aggregate fee of $3,898,000, at the closings of the Public Offering with an additional fee (the "Deferred Discount") of 3.5% ($6,821,500 including the underwriters' over-allotment option exercise) of the gross offering proceeds payable upon the consummation of the initial Business Combination. The Deferred Discount will become payable to the underwriters from the amounts held in the Trust Account solely in the event the Company completes its initial Business Combination.





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Critical Accounting Estimates

The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. Management does not believe that the Company has any critical accounting estimates.

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