Problem with Knitting Instruction!?

As has been indicated, there is not a net increase in the number of stitches, but the umption has also been made that you know what to do when the pattern says k2tog. I'm betting you don't understand that instruction. It doesn't mean to knit the next two stitches, but rather to insert your right needle into the next two stitches on the left needle and knit them together as one stitch. No, it isn't hard to do, but it might require you to practice it. So what happens is that you increase one stitch with the yarn over, then immediately decrease one stitch by knitting two stitches together across the row. You should end up with a lace pattern of holes after the next row is worked.