---

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# UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

# FORM 10-QSB

|x | QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT           OF 1934
|- | -------------------------------------------------------------------------------------------------

For the quarterly period ended June 30, 2006

|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
|- | --------------------------------------------------------------------------------

For the transition period from __________________ to __________________

Commission file number 000-50482

|ACRO INC.                                                        
|-----------------------------------------------------------------
|                                                                 
|(Exact Name of Small Business Issuer as Specified in Its Charter)

|Nevada                                                         | 98-0377767                          
|-------------------------------------------------------------- | ------------------------------------
|                                                               |                                     
|(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.)

|18 Halevna Street, Timrat, Israel 23840 
|----------------------------------------
|                                        
|(Address of Principal Executive Offices)

|+972 4 604 0483                                 
|------------------------------------------------
|                                                
|(Issuer's Telephone Number, Including Area Code)

|                                                                                  
|----------------------------------------------------------------------------------
|                                                                                  
|(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

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.

Yes xNo o

Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).

Yes oNo x



---

---



# APPLICABLE ONLY TO
ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed
all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange
Act after the distribution of securities under a plan confirmed by a court.

Yes oNo o

# APPLICABLE ONLY TO
CORPORATE ISSUERS

State the number of shares
outstanding of each of the issuers classes of common equity, as of the latest
practicable date:

# 32,288,006 shares of
common stock issued and outstanding at July 31, 2006

Transitional Small Business
Disclosure Format (Check one):

Yes oNo x

# PART I

# Item 1.  Financial
Statements.

Our consolidated financial statements
are stated in United States Dollars (US$) and are prepared in accordance with United
States Generally Accepted Accounting Principles.



---

---



ACRO Inc. (formerly Medina International Corp.) (A Development Stage Company) Consolidated Financial Statements For the Quarter Ended June 30, 2006 and for the Period from Inception (May 22, 2002) through June 30, 2006 (Unaudited)



---

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|ACRO Inc. (formerly Medina International Corp.)
|-----------------------------------------------
|(A Development Stage Company)                  
|Consolidated Balance Sheets, (Unaudited)       
|                                               

|                                                               | June 30 | December 31
|-------------------------------------------------------------- | ------- | -----------
|
|
|
|
|Assets                                                         |         |            
|                                                               |         |            
|Current assets:                                                |         |            
|Cash and cash equivalents                                      |         |            
|Prepaid expenses and other current assets                      |         |            
|                                                               |         |            
|Total current assets                                           |         |            
|                                                               |         |            
|                                                               |         |            
|Other non-current assets                                       |         |            
|Property and equipment, net                                    |         |            
|Intangible assets, net                                         |         |            
|                                                               |         |            
|                                                               |         |            
|Total assets                                                   |         |            
|                                                               |         |            
|                                                               |         |            
|Liabilities and stockholders' equity (deficit)                 |         |            
|                                                               |         |            
|Current liabilities:                                           |         |            
|Accounts payable and accrued liabilities                       |         |            
|                                                               |         |            
|                                                               |         |            
|Total current liabilities                                      |         |            
|                                                               |         |            
|                                                               |         |            
|Commitments (Note 9)                                           |         |            
|                                                               |         |            
|Stockholders' (deficit) equity:                                |         |            
|Common stock; $0.001 par value; 350,000,000 shares authorized; |         |            
|32,288,006 and 21,000,000 shares issued and outstanding as of  |         |            
|June 30, 2006 and December 31, 2005, respectively              |         |            
|Additional paid-in capital                                     |         |            
|Accumulated deficit                                            |         |            
|                                                               |         |            
|Total stockholders' equity (deficit)                           |         |            
|                                                               |         |            
|                                                               |         |            
|Total liabilities and stockholders' equity (deficit)           |         |            
|                                                               |         |            

See accompanying notes to the
consolidated financial statements.

2

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---



|ACRO Inc. (formerly Medina International Corp.)               
|--------------------------------------------------------------
|(A Development Stage Company)Consolidated Financial Statements
|Consolidated Statements of Operations, (Unaudited)            
|                                                              

|                           | Three months ended June 30 | Six months ended June 30 | Cumulativefrom inception(May 22, 2002)to June 30, 2006
|-------------------------- | -------------------------- | ------------------------ | ------------------------------------------------------
|
|
|
|
|Revenues                   |                            |                          |                                                       
|                           |                            |                          |                                                       
|                           |                            |                         
|Costs and expenses :       |                            |                         
|Research and development   |                            |                          |                                                       
|General and administrative |                            |                          |                                                       
|                           |                            |                          |                                                       
|                           |                            |                         
|Total operating expenses   |                            |                          |                                                       
|                           |                            |                          |                                                       
|                           |                            |                         
|Operating loss             |                            |                          |                                                       
|                           |                            |                         
|Interest income, net       |                            |                          |                                                       
|Other income, net          |                            |                          |                                                       
|                           |                            |                          |                                                       
|                           |                            |                         
|Net loss                   |                            |                          |                                                       
|                           |                            |                          |                                                       
|                           |                            |                         
|Basic and diluted net loss |                            |                         
|per common share           |                            |                          |                                                       
|                           |                            |                          |                                                       
|                           |                            |                         
|Weighted average shares    |                            |                         
|used in computing basic    |                            |                         
|and diluted net loss per   |                            |                         
|common share               |                            |                          |                                                       
|                           |                            |                          |                                                       

See accompanying notes to the consolidated
financial statements.

3

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---



|ACRO Inc. (formerly Medina International Corp.)               
|--------------------------------------------------------------
|(A Development Stage Company)Consolidated Financial Statements
|Statement of Stockholders' Equity (Deficit), (Unaudited)      
|                                                              

|                              | Shares | Common
stock | Additional
Paid-In
Capital | Deficit
Accumulated
During the
Development
Stage | Total
Stockholders'
Equity
(Deficit)
|----------------------------- | ------ | ------------ | -------------------------- | ------------------------------------------------ | ------------------------------------
|
|
|
|
|Inception, May 22, 2002       |        |              |                            | -                                                |                                     
|                              |        |             
|Sale of common stock for cash |        |              |                            | 7,000,000                                        |                                     
|Net loss for the period       |        |              |                            | -                                                |                                     
|                              |        |              |                            |                                                  |                                     
|                              |        |             
|Balance, December 31,         |        |             
|2002                          |        |              |                            | 7,000,000                                        |                                     
|                              |        |             
|Services contributed by       |        |             
|officers                      |        |              |                            | -                                                |                                     
|Sale of common stock for      |        |             
|cash                          |        |              |                            | 14,000,000                                       |                                     
|Offering costs                |        |              |                            | -                                                |                                     
|Net loss for the year         |        |              |                            | -                                                |                                     
|                              |        |              |                            |                                                  |                                     
|                              |        |             
|Balance, December 31,         |        |             
|2003                          |        |              |                            | 21,000,000                                       |                                     
|                              |        |             
|Net loss for the year         |        |              |                            | -                                                |                                     
|                              |        |              |                            |                                                  |                                     
|                              |        |             
|Balance, December 31,         |        |             
|2004                          |        |              |                            | 21,000,000                                       |                                     
|                              |        |             
|Net loss for the year         |        |              |                            | -                                                |                                     
|                              |        |              |                            |                                                  |                                     
|                              |        |             
|Balance, December 31,         |        |             
|2005                          |        |              |                            | 21,000,000                                       |                                     
|                              |        |             
|Issuance of Common            |        |             
|Stock on                      |        |             
|January 19, 2006              |        |              |                            | 10,100,006                                       |                                     
|Issuance of Common            |        |             
|Stock on                      |        |             
|March 15, 2006                |        |              |                            | 1,188,000                                        |                                     
|Offering costs                |        |              |                            |                                                  |                                     
|                              |        |             
|Stock-based compensation      |        |             
|to non-employees              |        |              |                            | -                                                |                                     
|Net loss for the period       |        |              |                            | -                                                |                                     
|                              |        |              |                            |                                                  |                                     
|                              |        |              |                            |                                                  |                                     
|Balance, June 30, 2006        |        |              |                            | 32,288,006                                       |                                     
|                              |        |              |                            |                                                  |                                     

See accompanying notes to the
consolidated financial statements

4

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---



|ACRO Inc. (formerly Medina International Corp.)               
|--------------------------------------------------------------
|(A Development Stage Company)Consolidated Financial Statements
|Consolidated Statements of Cash Flows, (Unaudited)            
|                                                              

|                                                          | Six months ended June 30 | Cumulativefrom inception(May 22, 2002)to June 30, 2006
|--------------------------------------------------------- | ------------------------ | ------------------------------------------------------
|
|
|
|
|Cash flows from operating activities:                     |                          |                                                       
|Net loss                                                  |                          |                                                       
|                                                          |                          |                                                       
|Adjustments to reconcile net loss to net cash used in     |                          |                                                       
|operating activities:                                     |                          |                                                       
|Depreciation and amortization                             |                          |                                                       
|Stock-based compensation                                  |                          |                                                       
|                                                          |                          |                                                       
|Changes in operating assets and liabilities:              |                          |                                                       
|Prepaid expenses and other assets (current & non-current) |                          |                                                       
|Accounts payable and accrued liabilities                  |                          |                                                       
|                                                          |                          |                                                       
|                                                          |                          |                                                       
|Net cash used in operating activities                     |                          |                                                       
|                                                          |                          |                                                       
|                                                          |                          |                                                       
|Cash flows from investing activities:                     |                          |                                                       
|Purchase of property, plant and equipment                 |                          |                                                       
|Purchase of intangible assets                             |                          |                                                       
|                                                          |                          |                                                       
|                                                          |                          |                                                       
|Net cash used in investing activities                     |                          |                                                       
|                                                          |                          |                                                       
|                                                          |                          |                                                       
|Cash flows from financing activities:                     |                          |                                                       
|Proceeds from issuance of common stock, net               |                          |                                                       
|                                                          |                          |                                                       
|                                                          |                          |                                                       
|Net cash provided by financing activities                 |                          |                                                       
|                                                          |                          |                                                       
|                                                          |                          |                                                       
|Net increase (decrease) in cash and cash equivalents      |                          |                                                       
|                                                          |                          |                                                       
|Cash and cash equivalents at beginning of period          |                          |                                                       
|                                                          |                          |                                                       
|                                                          |                          |                                                       
|Cash and cash equivalents at end of period                |                          |                                                       
|                                                          |                          |                                                       
|                                                          |                          |                                                       
|Supplemental disclosures of cash flow information:        |                          |                                                       
|Cash paid for interest                                    |                          |                                                       
|                                                          |                          |                                                       
|Cash paid for taxes                                       |                          |                                                       
|                                                          |                          |                                                       

See accompanying notes to the consolidated
financial statements.

5

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|ACRO Inc. (formerly Medina International Corp.)                   
|------------------------------------------------------------------
|(A Development Stage Company)Consolidated Financial Statements    
|Notes to the Consolidated Financial Statements as of June 30, 2006
|                                                                  

# Note 1  Business

| | ACRO,
Inc., (A Development Stage Company), (the Company) was incorporated on May
22, 2002, under the laws of the State of Nevada, as Medina International Corp. On May 4,
2006, the Company changed its name to ACRO, Inc. The Company originally was an oil and
gas consulting company in Canada and in the United States however, during 2006, following
a change of control and a private placement financing (see Note 6), the Company ceased to
engage in the oil and gas consulting business and engaged in development of products for
the detection of peroxide based explosives for the homeland security market.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Since
its inception, the Company has no significant revenues and no material operations and in
accordance with Statement of Financial Accounting Standard (SFAS) No. 7 Accounting
and Reporting by Development Stage Enterprises, the Company is considered a
development stage company.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
accompanying financial statements have been prepared assuming that the Company will
continue as a going concern. The Company has net losses for the period from inception
(May 22, 2002) through June 30, 2006 of $ 631,394. The Companys inability to
raise additional capital over the next several months on terms and within an acceptable
timeframe could force the Company to dramatically reduce its expenses, delay, scale back,
or eliminate certain of its planned activities and operations, including its research and
development activities, any of which could have a material adverse effect on the Companys
business, financial condition and results of operations.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Note 2  Summary of
Accounting Policies

| | A. | Basis
of Presentation
| | -- | ---------------------

| | These
financial statements are unaudited and, in the opinion of management, all adjustments
necessary for a fair presentation of such financial statements have been recorded. Such
adjustments consisted only of normal recurring items. Consolidated Balance Sheet
information as of December 31, 2005, included herein, has been derived from the audited
consolidated balance sheet as of December 31, 2005, included in the Companys Annual
Report on form 10-KSB for the year ended December 31, 2005.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
accompanying unaudited consolidated financial statements were prepared in accordance with
the instructions for Form 10-QSB and, therefore, do not include all disclosures necessary
for a complete presentation of financial condition, results of operations, and cash flows
in conformity with generally accepted accounting principles. All adjustments, which are,
in the opinion of management, of a normal recurring nature and are necessary for a fair
presentation of the interim financial statements, have been included. Nevertheless, these
financial statements should be read in conjunction with the consolidated financial
statements and related notes included in the Companys Annual Report on Form 10-KSB
for the year ended December 31, 2005. The results of operations for the periods ended
June 30, 2006 are not necessarily indicative of the results that may be expected for the
entire fiscal year or any other interim period.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6

---

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# Note 2  Summary of
Accounting Policies (contd)

| | B. | Use
of estimates in the preparation of financial statements
| | -- | -----------------------------------------------------------

| | The
preparation of the financial statements in conformity with US GAAP requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the financial statement date and
the reported expenses during the reporting periods. Actual results could differ from
those estimates.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | C. | Principles
of consolidation
| | -- | ---------------------------

| | The
consolidated financial statements include the accounts of the Company and its Israeli
subsidiary ACROSEC Ltd. (formerly known as Percival Ltd.). All material intercompany
transactions and balances have been eliminated in consolidation.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | D. | Cash
equivalents
| | -- | ----------------

| | The
Company considers all short term, highly liquid investments, which include short-term
deposits with original maturities of three months or less from the date of purchase that
are not restricted as to withdrawal or use and are readily convertible to known amounts
of cash, to be cash equivalents.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | E. | Reclassifications
| | -- | -----------------

| | Certain
prior period amounts have been reclassified in order to conform to the current period
presentation.
| | -----------------------------------------------------------------------------------------------------------

| | F. | Foreign
currency translation
| | -- | ----------------------------

| | The
Company considers the functional currency of the parent and subsidiary companies to be in
US Dollars. Assets and liabilities denominated in foreign currencies are translated using
the exchange rate on the balance sheet date. Revenue and expenses are translated at
average exchange rates prevailing during the year. Foreign currency transaction gains and
losses, which to date have not been material, are included in the Consolidated Statements
of Operations.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

7

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# Note 3  Property
and Equipment, Net

| |                                                  | Estimated
useful life
(years) | June 30
2006 | December 31
2005
| | ------------------------------------------------ | ----------------------------- | ------------ | ----------------
|
|
|
|
| | Computer equipment                               |                               |              |                 
| | Less - accumulated depreciation and amortization |                               |              |                 
| |                                                  |                               |              |                 
| |                                                  |                               |             
| |                                                  |                               |              |                 
| |                                                  |                               |              |                 

| | Depreciation
expense for the three months ended June 30, 2006, 2005 and for the cumulative period from
May 22, 2002 (date of inception) to June 30, 2006 was $46, $0 and $46, respectively.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Note 4  Intangible
Assets

| | In
March 2006, the Company purchased a patent from Ehud Keinan (Keinan), a
stockholder who holds 32.9% of the Companys shares of common stock, for $120,000.
The patent is being amortized over the life of the asset which is estimated at 10 years.
Amortization expense for the three and six months ended June 30, 2006 and for the
cumulative period from May 22, 2002 (date of inception) to June 30, 2006 was $3,000,
$3,493 and $ 3,493, respectively.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Note 5  Loss Per
Share

| | The
Company computes basic loss per share by dividing net loss by the weighted average number
of shares of common stock outstanding during the respective period; after giving
retroactive effect to the stock split that occurred during January 2006 (see Note 6).
Warrants to purchase 1,188,000 shares of common stock, issued in March 2006 at an
exercise price of $ 1.50 per share, were excluded from the computation of diluted net
loss per share for the applicable three and six months ended June 30, 2006, as such
warrants were anti-dilutive since the Company incurred a loss in these periods. No
warrants were outstanding as of June 30, 2005 and December 31, 2005.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Note 6  Stock
Transactions

| | On
January 25, 2006, the Company effected a seven for one stock split of its authorized and
outstanding shares of common stock. As a result, the authorized capital was changed from
50,000,000 to 350,000,000 shares of common stock. The stock split did not vary the par
value of the common stock. All stock figures have been retroactively restated to reflect
the stock split.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8

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# Note 6  Stock
Transactions (contd)

| | On
January 19, 2006, the Company consummated a private placement (the January 2006
Private Placement) pursuant to which the Company issued to certain investors
10,100,006 shares of common stock in consideration of a promissory note payable upon
demand issued by such investors to the company, in an aggregate gross proceeds of
approximately $ 43,286. The promissory note was paid in full by such investors in March
2006. In addition, pursuant to a share purchase agreement, two of the Companys
existing stockholders sold their entire interests in the Company to a new stockholder who
also participated in the January 2006 Private Placement, resulting in a change of control
in the Company.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
March 15, 2006, the Company consummated a second private placement (the March 2006
Private Placement) pursuant to which the Company issued to certain investors
1,188,000 shares of common stock, together with warrants to purchase 1,188,000 shares of
common stock at an exercise price of $1.50 per share, exercisable until March 15, 2008 in
consideration of an aggregate gross proceeds of $1,188,000, less offering costs of
$99,031.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Note 7  Equity
Based Compensation

| | In
April 2006, the Company engaged a consultant to serve on the advisory board. The
consultant will receive a grant of 83,333 shares of common stock for each quarter of
service on the advisory board provided to the Company. At June 30, 2006, the consultant
was entitled to receive 83,333 shares for services during the second quarter of 2006 with
a fair market value of $166,666.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
April 2006, the Companys subsidiary, ACROSEC Ltd., entered into an employment
agreement for a new Chief Executive Officer (CEO) for the subsidiary and for
the Company. The CEO will receive a monthly salary of $7,600 and shall be entitled to
participate in the Employee Stock Incentive Plan, when such a plan is adopted by the
Company. According to his employment agreement, the CEO shall be issued up to 968,640
restricted shares of Common Stock or options to buy such shares, representing 3% of the
Companys issued and outstanding share capital. These restricted shares of Common
Stock or options shall be subject to a vesting period of 3 years starting on April 23,
2006. As of June 30, 2006, no approval was made by the Board of Directors for a grant of
restricted Common Stock or options to the CEO, as such, no compensation expense was
incurred by the Company for the reported period.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
May 2006, the Company engaged an additional consultant to serve on the advisory board.
The consultant will receive a grant of 8,333 shares of common stock for each quarter of
service on the advisory board provided to the Company, not to exceed 100,000 shares. At
June 30, 2006, the consultant was entitled to receive 2,839 shares for services during
the second quarter of 2006 with a fair market value of $5,678.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
December 2004, the FASB issued Statement No. 123(R) Share-Based Payment. This
statement requires that stock-based compensation be recognized as a cost in the financial
statements and that such cost be measured based on the fair value of the stock-based
compensation. As of January 1, 2006 the Company has adopted this statement. As of June
30, 2006, no options or common stock have been granted or issued however, stock-based
awards amounting to 86,172 shares have been earned by consultants. As a result, the
Company has incurred stock-based compensation expenses of $172,344 for the reported
periods ended June 30, 2006. The Company incurred no stock-based compensation expense for
the period ended June 30, 2005.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9

---

---



# Note 8  Related
Party Transactions

| | In
February 2006, the Company entered into a consulting services agreement (the Consulting
Agreement) with a limited liability company wholly-owned by Keinan (see Note 4),
whereby Keinan has agreed to provide consulting services for a duration of three years at
a monthly fee of $ 3,000. The Company may terminate the Consulting Agreement with 60 days
notice. During the six month period ended June 30, 2006, the Company incurred $ 12,000
for the consulting services provided by Keinan. In addition to the consulting agreement,
the Company purchased a patent from Keinan in March 2006 (see Note 4).
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
the six month period ending June 30, 2006, the Company incurred approximately $ 24,300
for consulting services provided by the Companys Chairman of the Board of
Directors.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company is currently using the address of the Chairman of the Board, on a rent-free
basis, as its principle executive offices. There is no written lease agreement or other
written contract for the use of his premises.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
the six-month period ended June 30, 2005, the Company incurred $4,625 for accounting and
administrative services provided by a company owned by a former director of the Company.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Note 9  Commitments

| | On
June 7, 2006, the Company entered into a vehicle operating lease with a term of 36 months
ending on June 6, 2009. The minimum future lease payments under the lease at June 30,
2006 are:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                          | Amount
| | ------------------------ | ------
|
|
|
|
| | Year ending December 31, |       
| | 2006                     |       
| | 2007                     |       
| | 2008                     |       
| | 2009                     |       

10

---

---



Item 2. Managements Discussion and Analysis and Plan of Operation.

# FORWARD-LOOKING
STATEMENTS

This quarterly report contains
forward-looking statements as that term is defined in the Private Securities Litigation
Reform Act of 1995. These statements relate to future events or our future financial
performance. In some cases, you can identify forward-looking statements by terminology
such as may, should, expects, plans,
anticipates, believes, estimates,
predicts, potential or continue or the negative of
these terms or other comparable terminology. These statements are only predictions and
involve known and unknown risks, uncertainties and other factors, that may cause our or
our industrys actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.

Although we believe that the
expectations reflected in the forward-looking statements are reasonable, we cannot
guarantee future results, levels of activity, performance or achievements. Except as
required by applicable law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform these statements to
actual results.

Our financial statements are stated
in United States Dollars (US$) and are prepared in accordance with United States Generally
Accepted Accounting Principles. In this quarterly report, unless otherwise specified, all
dollar amounts are expressed in United States dollars. All references to common
stock refer to our shares of common stock.

As used in this quarterly report, the
terms we, us, our, and ACRO means ACRO
Inc., unless otherwise indicated.

# General

We develop products for the detection
of peroxide-based explosives for the homeland security market. We were incorporated under
the laws of the State of Nevada on May 22, 2002 under the name Medina International Corp.
On May 4, 2006, we changed our name to ACRO Inc. We effected this change of name by
merging our company with a wholly owned subsidiary of our company that we had formed
specifically for this purpose. We have a wholly owned subsidiary, Acrosec Ltd, which is
incorporated under the laws of the State of Israel. Our principal executive and head
offices are located at 18 Halevna Street, Timrat, Israel 23840.

We have incurred losses in each year
since our inception. We have not had revenues from operations in each of the last two
fiscal years.

# Plan of Operation

Our primary objectives over the 12
month period are to develop, manufacture, and commercialize our first product called the
Peroxide Explosives Tester or PET, which is a detection device for peroxide-based
explosives using the intellectual property covered in U.S. Patent No. 6,767,717.

Furthermore, we plan to continue to
set up our base of operations in Israel as our main Research & Development base, and
to initiate international Marketing & Sales capabilities in order to reach our
international market base worldwide.

Purchase or Sale of
Equipment

Within the next 6 months, we will
purchase molds and other assembly devices which are necessary to produce the plastic parts
of our product. The total value of such equipment is estimated at $95,000. We do not
intend to purchase any other significant equipment over the twelve month period.

Cash Requirements

At June 30, 2006, we had a working
capital of $656,523, which in accordance with our current monthly expenses will satisfy
our cash requirement only until June 30, 2007. We plan to secure additional funds by
secondary offerings or private placement during the next 12 months. There are no
assurances that we will be able to obtain sufficient cash for our continued operations. In
such event that we do not raise sufficient additional funds by secondary offering or
private placement, we will consider alternative financing options, if any, or be forced to
scale down our operations.

11

---

---



# Financial Condition,
Liquidity and Capital Resources

During the three months ended June
30, 2006, we incurred a loss of $321,168, compared to a net loss of $49,214 for the
comparative period in 2005. During the six months ended June 30, 2006, we incurred a loss
of $430,562, comparable to a net loss of $57,230 for the comparative period in 2005.

During the six months ended June 30,
2006, we incurred $434,253 of operating expenses, comprised primarily of $56,442 for
research and development costs, $172,344 for stock-based compensation expenses, $94,567
for legal costs, $25,000 for the audit of our December 31, 2005 financial statements and
for the review of our March 31, 2006 and June 30, 2006 financial statements by our
independent auditor.

During the six months ended June 30,
2005, we incurred $57,230 of operating expenses, comprising primarily of $47,189 for due
diligence services and $10,041 for accounting, administrative, and consulting services.

At June 30, 2006, we had a working
capital of $656,523.

At June 30, 2006, our company had
total assets of $928,982, which consisted mainly of cash of $698,311, intangible assets of
$116,507, and prepaid expenses and other current assets of 109,998.

At June 30, 2006, our companys
total liabilities were $151,786.

We had no revenues during the six
months ended June 30, 2006, and no significant revenues from the period from inception
through June 30, 2006.

Going Concern

The continuation of our business is
dependent upon our raising additional financial support. The issuance of additional equity
securities by us could result in a significant dilution in the equity interests of our
current stockholders. Obtaining commercial or other loans, assuming those loans would be
available, would increase our liabilities and future cash commitments.

We have historically incurred losses,
and through June 30, 2006, we have incurred losses of $631,394 since our inception.
Because of these historical losses, we will require additional working capital to develop
our business operations.

There are no assurances that we will
be able to either (1) achieve a level of revenues adequate to generate sufficient cash
flow for operations; or (2) obtain additional financing through either private placement,
public offerings and/or bank financing necessary to support our working capital
requirements. To the extent that funds generated from operations are insufficient to meet
our ongoing capital requirements, we will have to raise additional working capital by
means of private placements, public offerings and/or bank financing. No assurance can be
given that additional financing will be available, or if available, will be on terms
acceptable to us. If adequate working capital is not available we may not increase our
operations and if we are unable to raise additional funds we may cease operations.

These conditions raise substantial
doubt about our ability to continue as a going concern. The financial statements do not
include any adjustments relating to the recoverability and classification of asset
carrying amounts or the amount and classification of liabilities that might be necessary
should we be unable to continue as a going concern.

Our independent auditors report
on our audited financial statements, in our Form 10-KSB for the fiscal year ended
December 31, 2005, contained a going concern qualifier. The qualifier explanatory
paragraph contained in their audit report should be read in connection with
managements discussion of our financial condition, liquidity and capital resources.

Product in Development

For the next 12 months, we plan to
develop, manufacture and commercialize our first product called the Peroxide Explosives
Tester or PET. PET is a small disposable pen like probe which detects the presence of
peroxide-based explosives using three chemical solutions and relies on direct contact with
the suspicious substance. PET has been designed for rapid, on-site detection of
peroxide-based explosives. Its main advantages are high sensitivity, high selectivity,
fast response, simple operation, small size and cost effectiveness. Our product candidate
is in an early stage of development and its risk of failure is high. To date, the data
supporting our development programs is derived solely from laboratory and limited early
stage trials that were not all designed to be statistically significant or
proof-of-concept trial, some of which are exploratory in nature. It is impossible to
predict when or if our product candidates will prove effective. We cannot assure you that
our development and testing of PET will be successful or that PET will gain commercial
acceptance in the marketplace.

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We may follow PET with additional
future products utilizing our proprietary technologies and public domain methods for
detecting other explosives, however, we currently do not have concrete plans or are
developing any other products.

Employees

We currently have one employee, Yami
Tarsi, who serves as our Chief Executive Officer. We also hired the services of both Gadi
Aner who serves as our Chairman and Jacob Bar-Shalom, who serves as our Acting Chief
Financial Officer. We may hire an additional three employees over the next 12 month
period, including a Chief Operating Officer, Technician, and other administrative staff.
We may outsource contract employment as needed.

# OFF-BALANCE SHEET
ARRANGEMENTS

We have a lease agreement for the
lease of companys car for the duration of 36 months since June 7th, 2006.
According to this agreement, we have a liability to pay $742 per month for the duration of
the lease agreement.

# Item 3. Controls and
Procedures.

We performed an evaluation of the
effectiveness of our disclosure controls and procedures that are designed to ensure that
the material financial and non-financial information required to be disclosed in our
quarterly report and filed with the Securities and Exchange Commission is recorded,
processed, summarized and reported timely within the time period specified in the
SECs rules and forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required to be
disclosed by an issuer in the reports that it files or submits under the Securities Act of
1933, as amended, is accumulated and communicated to the issuers management,
including its principal executive and principal financial officers, or persons performing
similar functions, is appropriate to allow timely decisions regarding required disclosure.
There can be no assurance that our disclosure controls and procedures will detect or
uncover all failures of persons within our company to disclose material information
otherwise required to be set forth in our reports. Nevertheless, our disclosure controls
and procedures are designed to provide reasonable assurance of achieving the desired
control objectives. Based on our evaluation, our management, including our Chief Executive
Officer and Chief Financial Officer, have concluded that our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15(d)  15(e) of the Securities
Exchange Act of 1934, as amended) as of the end of the period covered by this report are
effective at such reasonable assurance level.

# PART II  OTHER
INFORMATION

# Item 1. Legal
Proceedings.

None.

# Item 2. Unregistered
Sales of Equity Securities and Use of Proceeds

None.

# Item 3. Defaults Upon
Senior Securities.

None.

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

None.

# Item 5. Other
Information.

N/A.

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# Item 6. Exhibits

The following exhibits, required by
Item 601 of Regulation S-B, are being filed as part of this quarterly report, or are
incorporated by reference where indicated:

|(2) |  | Plan
of purchase, sale, reorganization, arrangement, liquidation or succession
|--- |  | ------------------------------------------------------------------------------

|2.1 |  | Agreement
 and Plan of Merger  for the Merger of ACRO Inc.  with and into  Medina  International
 Corp.,          dated April 25, 2006 (incorporated by reference from our current report
on Form 8-K filed May 4, 2006).
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | Articles
of Incorporation and By-laws
|--- |  | -------------------------------------

|3.1 |  | Articles
of Incorporation as amended (incorporated by reference from our registration statement
         on Form SB-2 filed November  21, 2003)
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------

|3.2. |  | Stamped
Certificate of Change Pursuant to NRS 78.209 filed with the State of Nevada (incorporated
         by reference from our current report on Form 8-K/A filed February 13, 2006)
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.3 |  | Bylaws
dated  February  February 25, 2005  (incorporated  by reference from our current report
on Form 8-K filed March 21, 2005).
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------

|(10) |  | Material
Contracts
|---- |  | ------------------

|10.1 |  | Patent
Purchase  Agreement  between the Registrant and Prof. Ehud Keinan  (incorporated  by
reference from          our current report on Form 8-K filed February 3, 2006).
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.2 |  | Consulting
 Agreement  between the Registrant and BioTech  Knowledge LLC  (incorporated  by
reference from          our current report on Form 8-K filed February 3, 2006).
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.3 |  | Letter
of Agreement  between the Registrant and BioTech  Knowledge LLC (incorporated by
reference from our          current report on Form 8-K filed February 3, 2006).
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.4 |  | Employment
 Agreement  between the Registrant and Yami Tarsi  (incorporated  by reference from our
current          report on Form 8-K filed May 12, 2006).
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------

|10.5 |  | Advisory
Board  Agreement  between the Registrant and Mr. Ehud Barak  (incorporated  by reference
from our          current report on Form 8-K filed April 7, 2006).
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.6 |  | Advisory
Board Agreement between the Registrant and Prof.  Richard Lerner  (incorporated by
reference from          our current report on Form 8-K filed June 5, 2006).
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(31) |  | Section
302 Certification
|---- |  | -------------------------

|31.1 |  | Certification
of Principal Executive Officer
|---- |  | --------------------------------------------

|31.2 |  | Certification
of Principal Financial Officer
|---- |  | --------------------------------------------

|(32) |  | Section
906 Certification
|---- |  | -------------------------

|32.1 |  | Certification
of Principal Executive Officer
|---- |  | --------------------------------------------

|32.2 |  | Certification
of Principal Financial Officer
|---- |  | --------------------------------------------

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# SIGNATURES

In accordance with the requirements
of the Exchange Act of 1934, the registrant caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

|ACRO INC.By: /s/ Yami Tarsi
Yami Tarsi, Chief Executive Officer(Principal Executive Officer)Date: August 6, 2006
|------------------------------------------------------------------------------------------------------------------------------

|By: /s/ Jacob Bar-Shalom
Jacob Bar-Shalom, Acting Chief Financial Officer(Principal Financial Officer and Principal Accounting Officer)Date: August 6, 2006
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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