UNITED STATES SECURITIES AND EXCHANGE COMMISSION



Washington, D.C. 20549



FORM 10-Q



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



For the quarterly period ended September 30, 2011



OR



o                 TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the transition period from 
to



Commission File Number 000-50482



ACRO Inc.

(Exact name of registrant as specified in
its charter)



|Nevada                          |  | 98-0377767         
|------------------------------- |  | -------------------
|(State or Other Jurisdiction of |  | (IRS Employer      
|Incorporation or Organization)  |  | Identification No.)



|Ben Gurion Street 1, Bnei Brak, Israel   |  | 23840     
|---------------------------------------- |  | ----------
|(Address of Principal Executive Offices) |  | (Zip Code)



|972-73-7963851                                      
|----------------------------------------------------
|(Registrant’s Telephone Number, Including Area Code)



|18 Halivne Street, Timrat, Israel                                                 
|----------------------------------------------------------------------------------
|(Former Name, Former Address and Former Fiscal year, if changed since last report)



Indicate by check mark whether the registrant:
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 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 þ
No o



Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).



Yes  o
No o



Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company:



|Large accelerated filer o |  | Accelerated filer o        
|------------------------- |  | ---------------------------
|Non-accelerated filer o   |  | Smaller reporting company þ



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



Yes o
No þ



Indicate the number of shares outstanding of
each of the issuer’s classes of common stock, as of the latest practicable date:



As of November 14, 2011, 193,487,806 shares of
the registrant’s common stock were outstanding.









Table of Contents

ACRO INC.

(“The Company”)

INDEX



|PART I. FINANCIAL INFORMATION                                                                 |  | 2 
|--------------------------------------------------------------------------------------------- |  | --
|Item 1. Financial Statements                                                                  |  | 2 
|Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |  | 11
|Item 3. Quantitative and Qualitative Disclosures about Market Risk                            |  | 15
|Item 4T. Controls and Procedures                                                              |  | 16
|PART II. OTHER INFORMATION                                                                    |  | 17
|Item 1. Legal Proceedings                                                                     |  | 17
|Item 1A. Risk Factors                                                                         |  | 17
|Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 17
|Item 3. Defaults Upon Senior Securities                                                       |  | 17
|Item 4. [Removed and Reserved]                                                                |  | 17
|Item 5. Other Information                                                                     |  | 17
|Item 6. Exhibits                                                                              |  | 17
|Signatures                                                                                    |  | 18
|Exhibit Index                                                                                 |  | 19
|Certification of CEO Pursuant to Section 302                                                  |  |   
|Certification of CFO Pursuant to Section 302                                                  |  |   
|Certification Pursuant to U.S.C. Section 1350                                                 |  |   











|Item 1. | Financial Statement (Unaudited)
|------- | -------------------------------





ACRO INC. AND ITS SUBSIDIARY





INTERIM CONSOLIDATED FINANCIAL STATEMENTS



AS OF



September 30, 2011



UNAUDITED





INDEX





|PART I - FINANCIAL INFORMATION                                          | PAGE                                                                           
|----------------------------------------------------------------------- | -------------------------------------------------------------------------------
|                                                                        |                                                                                
|Item 1 – INTERIM  CONSOLIDATED FINANCIAL STATEMENTS         (UNAUDITED) |                                                                                
|                                                                        |                                                                                
|                                                                        | Balance Sheets -                                                               
|                                                                        | September 30, 2011 and December 31, 2010                                       
|                                                                        |                                                                                
|                                                                        | Statements of Operations -                                                     
|                                                                        | Nine and three months ended September 30, 2011 and 2010 and from inception date
|                                                                        |                                                                                
|                                                                        | Statements of Cash Flows -                                                     
|                                                                        | Nine months ended September 30, 2011 and 2010 and from inception date          
|                                                                        |                                                                                
|                                                                        | Notes to the Financial Statements                                              
|                                                                        |                                                                                





















ACRO INC. AND ITS SUBSIDIARY

CONSOLIDATED
BALANCE SHEETS

US Dollars



|                                                                                                                                                                                           |  |  | As of
        September

30,
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  |  | ----------------------------
|                                                                                                                                                                                           |  |  | 2011                        
|                                                                                                                                                                                           |  |  | (Unaudited)                 
|ASSETS                                                                                                                                                                                     |  |  |                             
|                                                                                                                                                                                           |  |  |                             
|CURRENT ASSETS:                                                                                                                                                                            |  |  |                             
|                                                                                                                                                                                           |  |  |                             
|Cash and cash equivalents                                                                                                                                                                  |  |  | 207                         
|Trade receivables                                                                                                                                                                          |  |  | 455                         
|Accounts and other receivables                                                                                                                                                             |  |  | 36,425                      
|                                                                                                                                                                                           |  |  |                             
|TOTAL CURRENT ASSETS                                                                                                                                                                       |  |  | 37,087                      
|                                                                                                                                                                                           |  |  |                             
|PROPERTY AND EQUIPMENT, NET                                                                                                                                                                |  |  | 8,132                       
|                                                                                                                                                                                           |  |  |                             
|TOTAL ASSETS                                                                                                                                                                               |  |  | 45,219                      
|                                                                                                                                                                                           |  |  |                             
|LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)                                                                                                                                          |  |  |                             
|                                                                                                                                                                                           |  |  |                             
|CURRENT LIABILITIES:                                                                                                                                                                       |  |  |                             
|Accounts payable and other current liabilities                                                                                                                                             |  |  | 35,467                      
|TOTAL CURRENT LIABILITIES                                                                                                                                                                  |  |  | 35,467                      
|                                                                                                                                                                                           |  |  |                             
|LONG-TERM LIABILITIES:                                                                                                                                                                     |  |  |                             
|Convertible promissory notes (Note 5)                                                                                                                                                      |  |  | -                           
|TOTAL  LIABILITIES                                                                                                                                                                         |  |  | 35,467                      
|                                                                                                                                                                                           |  |  |                             
|COMMITMENTS (Notes 3 and 6)                                                                                                                                                                |  |  |                             
|                                                                                                                                                                                           |  |  |                             
|SHAREHOLDERS' EQUITY (DEFICIENCY):                                                                                                                                                         |  |  |                             
|Share capital -                                                                                                                                                                            |  |  |                             
|Common stock of $ 0.001 par value – 
700,000,000 shares authorized; 193,487,806 and 68,824,268
        shares issued and outstanding as of September 30, 2011 and as of December 31, 2010. |  |  | 193,487                     
|Additional paid-in capital                                                                                                                                                                 |  |  | 4,098,914                   
|Accumulated deficit during the development stage                                                                                                                                           |  |  | (4,282,649)                 
|                                                                                                                                                                                           |  |  |                             
|TOTAL SHAREHOLDERS' EQUITY (DEFICIENCY)                                                                                                                                                    |  |  | 9,752                       
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)                                                                                                                                    |  |  | 45,219                      
|                                                                                                                                                                                           |  |  |                             
|                                                                                                                                                                                           |  |  |                             





The accompanying notes are an integral part
of the consolidated financial statements.

















ACRO INC. AND ITS SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

US Dollars (except share and per share data)





|                                                                        |  |              |  |              |  |             |  |             |  | Inception      
|----------------------------------------------------------------------- |  | ------------ |  | ------------ |  | ----------- |  | ----------- |  | ---------------
|                                                                        |  | For the      |  | For the      |  | For the     |  | For the     |  | through        
|                                                                        |  | Three Months |  | Three Months |  | Nine
Months |  | Nin Months  |  | May 22, 2002 to
|                                                                        |  | September    |  | September    |  | September   |  | September   |  | September      
|                                                                        |  | 30, 2011     |  | 30, 2011     |  | 30, 2011    |  | 30, 2011    |  | 30, 2011       
|                                                                        |  | (unaudited)  |  | (unaudited)  |  | (unaudited) |  | (unaudited) |  | (unaudited)    
|                                                                        |  |              |  |              |  |             |  |             |  |                
|Revenues                                                                |  | - . -        |  | 14,639       |  | 3,300       |  | 74,015      |  | 227,803        
|                                                                        |  |              |  |              |  |             |  |             |  |                
|Costs and expenses:                                                     |  |              |  |              |  |             |  |             |  |                
|                                                                        |  |              |  |              |  |             |  |             |  |                
|Research and development                                                |  | 3,117        |  | (4,737)      |  | 168         |  | (64,856)    |  | (585,401)      
|                                                                        |  |              |  |              |  |             |  |             |  |                
|Sales and marketing                                                     |  | - . -        |  | - . -        |  | - . -       |  | (4,215)     |  | (324,350)      
|                                                                        |  |              |  |              |  |             |  |             |  |                
|General and administrative                                              |  | 24,175       |  | (76,624)     |  | (85,133)    |  | (214,175)   |  | (3,642,525)    
|                                                                        |  |              |  |              |  |             |  |             |  |                
|Impairment of Intangible assets                                         |  | - . -        |  | - . -        |  | - . -       |  | - . -       |  | (62,507)       
|                                                                        |  |              |  |              |  |             |  |             |  |                
|Total operating income (expenses)                                       |  | 27,292       |  | (81,361)     |  | (84,965)    |  | (283,246)   |  | (4,614,783)    
|                                                                        |  |              |  |              |  |             |  |             |  |                
|Operating income (loss)                                                 |  | 27,292       |  | (66,722)     |  | (81,665)    |  | (209,231)   |  | (4,386,980)    
|                                                                        |  |              |  |              |  |             |  |             |  |                
|Interest and other income (expenses), net                               |  | 874          |  | (12,473)     |  | (35,476)    |  | (7,975)     |  | (126,643)      
|                                                                        |  |              |  |              |  |             |  |             |  |                
|Income from forgiveness of
debts (Note 5b and Note 7b)                  |  | 264,000      |  | - . -        |  | 299,000     |  | - . -       |  | 299,000        
|                                                                        |  |              |  |              |  |             |  |             |  |                
|Income (Loss) before taxes on income                                    |  | 292,166      |  | (79,195)     |  | 181,859     |  | (217,206)   |  | (4,214,623)    
|                                                                        |  |              |  |              |  |             |  |             |  |                
|Taxes on income                                                         |  | - . -        |  | - . -        |  | - . -       |  | - . -       |  | (68,026)       
|                                                                        |  |              |  |              |  |             |  |             |  |                
|Net  income (loss) for the period                                       |  | 292,166      |  | (79,195)     |  | 181,859     |  | (217,206)   |  | (4,282,649)    
|                                                                        |  |              |  |              |  |             |  |             |  |                
|Basic and diluted net loss per common share                             |  | (0.00)       |  | (0.00)       |  | (0.00)      |  | (0.00)      |  | (0.08)         
|                                                                        |  |              |  |              |  |             |  |             |  |                
|Number of shares used in computing basic and diluted net loss per share |  | 193,487,806  |  | 67,823,725   |  | 193,487,806 |  | 68,108,991  |  | 193,487,806    







The accompanying
notes are an integral part of the consolidated financial statements









ACRO INC. AND ITS SUBSIDIARY

CONSOLIDATED
STATEMENTS OF CASH FLOWS

US Dollars

|                                                                                    |  | For the Nine Months Ended
        September 30, |           | Cumulative from Inception (May 22, 2002) to September 30,
|----------------------------------------------------------------------------------- |  | ----------------------------------------------- | --------- | ---------------------------------------------------------
|                                                                                    |  | 2011                                            |           | 2010                                                     
|                                                                                    |  | (Unaudited)                                     |           | (Unaudited)                                              
|CASH FLOWS FOR OPERATING ACTIVITIES:                                                |  |                                                 |           |                                                          
|Net income (loss) for the period                                                    |  |                                                 | 181,859   |                                                          
|Adjustments to reconcile net loss to net cash used in operating activities:         |  |                                                 |           |                                                          
|Services contributed by officers                                                    |  |                                                 | - . -     |                                                          
|Depreciation and amortization                                                       |  |                                                 | 7,848     |                                                          
|Expenses for beneficial conversion feature                                          |  |                                                 | 38,692    |                                                          
|Stock-based compensation                                                            |  |                                                 | 11,672    |                                                          
|Income from settlement of liability                                                 |  |                                                 | (299,000) |                                                          
|Changes in assets and liabilities:                                                  |  |                                                 |           |                                                          
|Decrease (Increase) in trade receivables                                            |  |                                                 | 612       |                                                          
|Increase in accounts expenses and other receivables                                 |  | (9,167)                                         |           | (15,227)                                                 
|Increase (Decrease) in accounts payable and other currents                          |  |                                                 | (99,644)  |                                                          
|                                                                                    |  |                                                 |           |                                                          
|Net cash used in operating activities                                               |  |                                                 | (167,128) |                                                          
|                                                                                    |  |                                                 |           |                                                          
|CASH FLOWS FOR INVESTING ACTIVITIES:                                                |  |                                                 |           |                                                          
|Purchase and production of property and equipment                                   |  |                                                 | - . -     |                                                          
|Increase in long-term bank deposits                                                 |  |                                                 | - . -     |                                                          
|Purchase of intangible assets                                                       |  |                                                 | - . -     |                                                          
|                                                                                    |  |                                                 |           |                                                          
|Net cash used in investing activities                                               |  |                                                 | - . -     |                                                          
|                                                                                    |  |                                                 |           |                                                          
|CASH FLOWS FROM FINANCING ACTIVITIES:                                               |  |                                                 |           |                                                          
|Increase (Decrease) in convertible promissory note                                  |  |                                                 | (1,096)   |                                                          
|Proceeds from issue of common stock                                                 |  |                                                 | 161,000   |                                                          
|Short-term bank credit                                                              |  |                                                 | 2         |                                                          
|Offering costs                                                                      |  |                                                 | - . -     |                                                          
|                                                                                    |  |                                                 |           |                                                          
|Net cash provided by financing activities                                           |  |                                                 | 159,906   |                                                          
|                                                                                    |  |                                                 |           |                                                          
|Increase (Decrease) in cash and cash equivalents                                    |  |                                                 | (7,222)   |                                                          
|Cash and cash equivalents at the beginning of the period                            |  |                                                 | 7,429     |                                                          
|Cash and cash equivalents at the end of the period                                  |  |                                                 | 207       |                                                          
|                                                                                    |  |                                                 |           |                                                          
|APPENDIX A -                                                                        |  |                                                 |           |                                                          
|Supplemental disclosure of non-cash financing activities and cash flow information: |  |                                                 |           |                                                          
|Conversion of shareholders' loans to equity                                         |  |                                                 | 19,000    |                                                          
|Conversion of convertible promissory note to equity                                 |  |                                                 | 186,774   |                                                          







The accompanying notes are an integral part
of the consolidated financial statements.









ACRO INC. AND ITS SUBSIDIARY

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

US Dollars



Note 1:-	NATURE
OF OPERATIONS AND BASIS OF PRESENTATION



A. General





ACRO Inc. (A Development Stage 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. ACRO Inc. was originally 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, ACRO Inc. ceased to engage in oil and gas consulting and engaged
in development of products for the detection of military and commercial explosives for the homeland security market.



Hereinafter, ACRO Inc. and its wholly owned subsidiary
in Israel will be referred to as "the Company."



Since its inception, the Company has no significant revenues
and in accordance with ASC 915 codified from Statement of Financial Accounting Standard (“SFAS”) No. 7 “Accounting
and Reporting by Development Stage Enterprises”, the Company is considered a development stage company.



b.  Going concern



The accompanying financial statements have been prepared
on a basis which assumes that the Company will continue as a going concern and which contemplates the realization of assets and
the satisfaction of liabilities and commitments in the normal course of business.  The Company has a limited operating
history, and has incurred losses of $4,379,495 from operations as of September 30, 2011.  These circumstances raise substantial
doubt about the Company’s ability to continue as a going concern.  Management’s plans with regard to these
matters include continued development, marketing and licensing of its products as well as seeking additional financing arrangements.  There
is no assurance that the Company will be successful in obtaining sufficient revenues from its products or financing on terms acceptable
to the Company.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.



In the event that the company does not generate revenues
or raise sufficient additional funds by a public offering or a private placement, the management will consider alternative financing
options, if any, or be forced to scale down or perhaps even cease its operations.





c.  On July 5, 2011 the Company entered
into a share purchase agreement, See also Note 7b.











ACRO INC. AND ITS SUBSIDIARY

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

US Dollars



Note 2:-	SIGNIFICANT
ACCOUNTING POLICIES



a.
Basis of Presentation

The accompanying consolidated financial
statements are presented in accordance with Form 10-Q and item 310 under subpart A of Regulation S-B. Accordingly, they do not
include all of the information and footnotes required by accounting principles generally accepted in the United States of America.
In the opinion of management, all adjustments (consisting of normal and recurring adjustments) necessary for a fair presentation
have been included. Operating results for the nine months ended September 30, 2011 are not necessarily indicative of the results
that may be expected for the year ended December 31, 2011. The accompanying consolidated financial statements and the notes thereto
should be read in conjunction with the Company's audited consolidated financial statements as of and for the year ended December
31, 2010 included in the Company's Form 10-KSB filed April 15, 2011.



b.
Use of Estimates

The preparation of financial statements
in conformity with accounting principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and accompanying notes. The reported amounts of revenues
and expenses during the reporting period may be affected by the estimates and assumptions management is required to make. Estimates
that are critical to the accompanying consolidated financial statements relate principally to depreciation and recoverability of
long lived assets. The markets for the Company’s products are characterized by intense price competition, rapid technological
development, evolving standards and short product life cycles; all of which could impact the future realization of its assets.
Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the period that they are determined
to be necessary. It is at least reasonably possible that management’s estimates could change in the near term with respect
to these matters.



c.	Financial
Statements in U.S. dollars

As the majority of
the Company's financing is received in U.S. dollars. Accordingly, the Company has determined the U.S. dollar as the currency of
its primary economic environment and thus, its functional and reporting currency. Non-dollar transactions and balances have been
remeasured into US dollars in accordance with Statement of Financial Accounting Standard No. 52 "Foreign Currency Translation"
("SFAS No. 52"). All transaction gains and losses from the re-measurement of monetary balance sheet items denominated
in non-dollar currencies are reflected in the statements of operations as financial income or expenses, as appropriate.



The financial statements
of foreign subsidiaries, whose functional currency is not the U.S. dollar, have been translated into U.S. dollars in accordance
with FAS No. 52. All balance sheet accounts have been translated using the exchange rates in effect at the balance sheet date.
Statements of operations amounts have been translated using the average exchange rate for the period.



d. 
 Principles of Consolidation



The
consolidated financial statements include the accounts of the Company and its wholly-owned Israeli subsidiary, Acrosec Ltd. All
material intercompany transactions and balances have been eliminated in consolidation.











ACRO INC. AND ITS SUBSIDIARY

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

US Dollars





Note 2:-	SIGNIFICANT
ACCOUNTING POLICIES (cont.)



e.  Convertible debt with beneficial conversion feature



The Company accounts
for convertible debt with beneficial conversion feature in accordance with ASC 470-20 which requires the Company to recognize separately,
at issuance, the embedded beneficial conversion feature in additional paid-in capital. The recognition is done by allocating a
portion of the proceeds equal to the intrinsic value of that feature in additional paid-in capital. The intrinsic value is calculated
as the difference between the effective conversion price of the convertible debt and the fair value of the shares at issuance date.



f. Exchange
Rates



Exchange and
linkage differences are charged or credited to operations as incurred.



Exchange rates:



|                              |  | September 30,                    |  | December 31,
|----------------------------- |  | -------------------------------- |  | ------------
|                              |  | 2011                             |  | 2010        
|New Israeli Shekel (NIS)      |  | $ 0.269                          |  | $ 0.282     
|                              |  |                                  |  |             
|                              |  | Nine  Months Ended September 30,
|Decrease in Rate of Exchange: |  | 2011                             |  | 2010        
|NIS                           |  | (4.6%)                           |  | (3.0%)      





g.Implementation of New Accounting Standards



In January 2010, the FASB issued Accounting
Standards Update No. 2010-06, Fair Value Measurements and Disclosures (the “Update”), which provides amendments to
Accounting Standards Codification 820-10 (Fair Value Measurements and Disclosures – Overall Subtopic) of the Codification.

The Update requires improved disclosures
about fair value measurements.  Separate disclosures need to be made of the amounts of significant transfers in and out
of Level 1 and Level 2 fair value measurements along with a description of the reasons for the transfers.  Also, disclosure
of activity in Level 3 fair value measurements needs to be made on a gross basis rather than as one net number.  The
Update also requires: (1) fair value measurement disclosures for each class of assets and liabilities, and (2) disclosures about
the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements, which
are required for fair value measurements that fall in either Level 2 or Level 3.  The new disclosures and clarifications
of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the
Level 3 activity disclosures, which are effective for fiscal years beginning after December 15, 2010, and for interim periods within
those fiscal years.  The enhanced disclosure requirements have not had a material impact on the Company’s financial
reporting.







ACRO INC. AND ITS SUBSIDIARY

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

US Dollars



Note 3 – STOCK-BASED
COMPENSATION



During 2006, the Company engaged three consultants
to serve as members of its advisory board. The consultants are entitled to receive shares of common stock each quarter that they
serve on the Company’s advisory board. One of the consultants resigned during 2007. During the nine month period ended September
30, 2011, 2010 and for the cumulative period from May 22, 2002 (date of inception) to September 30, 2011, the consultants earned
0 shares, 80,512 shares and 11,264,407 shares respectively. 113,844 shares out of the total shares that were earned have not yet
been issued. During the nine month period ended September 30, 2011, 2010 and for the cumulative period from May 22, 2002 (date
of inception) to September 30, 2011, compensation expense recorded in respect of the shares earned by the consultant amounted to
$0, $0 and $1,006,207 respectively.



Compensation expense was calculated by multiplying
the amount of shares earned by their fair market value on the last day of the service period completed by the consultants.

Under the agreements with the consultants they
are not entitled to earn any more shares of common stock for future services to be performed.



In addition, following the adoption of a Stock
Option Plan, on April 28, 2008, the Company’s board of directors approved the grant of an option to the director to purchase
215,232 shares of common stock of the Company at an exercise price per share that is equal to the par value of the Company’s
common stock. All options became vested as of September 30, 2010.



On April 28, 2008, the Company’s board
of directors approved the grant of options to purchase 1,800,000 shares of common stock of the Company to the trustee in trust
for the Company’s executives, at an exercise price of $0.075 per share. 1,350,000 of the options became vested as of December
31, 2010, 450,000 of the options were cancelled, due to work termination of one of the executives. An additional option to purchase
215,232 shares of common stock of the Company was granted to a director at an exercise price per share that is equal to the par
value of the Company’s common stock (as described above).



On April 28, 2008, the Company’s board
of directors further approved the issuance of 147,665 shares of common stock to two of the Company’s directors at a price
per share that is equal to the par value of the Company’s common stock and other valuable consideration.



On July 8, 2008, the Company’s board
of directors approved the grant of options to purchase 400,000 shares of common stock of the Company to the trustee in trust for
two of the Company’s executives, at an exercise price of $0.06 per share. All options became vested as of December 31, 2010.



On July 5, 2011 in the framework of the purchase
agreement, the Options Plan expired, See Note 7b.



Note 4 – RELATED PARTY TRANSACTIONS



In February 2006, the Company entered into
a consulting services agreement (the “Consulting Agreement”) with BioTech Knowledge LLC, a limited liability company
wholly-owned by Prof. Keinan (see Note 3), whereby Prof. Keinan has agreed to provide consulting services for duration of three
years at a monthly fee of $3,000. The agreement was terminated on February 1, 2009. Starting from July 2008, Prof. Keinan agreed
that the Company may defer the payment of 100% of his monthly fee until further notice. The total amount of the deferred payment
as of September 30, 2011, is $19,500 and was converted to equity. See also Note 7a.





ACRO INC. AND ITS SUBSIDIARY

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

US Dollars



Note 4 - RELATED PARTY TRANSACTIONS(cont.)



During the three and nine month periods ended
September 30, 2011 and 2010, the Company incurred $0, for the consulting services provided by Prof. Keinan. In addition to the
Consulting Agreement, the Company purchased a patent from Prof. Keinan in March 2006 .



During the nine month periods ended September
30, 2011 and 2010, the Company incurred an expense of $31,680 and $31,680, respectively, for consulting services provided by the
Company’s CEO and chairman of the board of directors.



Starting from October 2008, the Company’s
CEO and chairman of the board of directors agreed that the Company may defer the payment of 100% of his monthly fee until
further notice.



As of September 30, 2011, the remaining deferred
amounts were waived and offset from expenses. See also Note 7b.



On April 28, 2008, the Company’s board
of directors approved the issuance of 147,665 shares of common stock to two of the Company’s directors.

See Note 7b in regard to changes in related
parties.





Note 5 – CONVERTIBLE PROMISSORY NOTES AND OTHER



a. On February 22, 2009,
the Company received an interest free loan in the amount of $93,274 in the form of a convertible promissory note with BioTech Knowledge
LLC, convertible to up to 11,659,250 shares of the Company's common stock, at a price of $0.008 per share, within 12 months from
the closing date, with each share of common stock such converted awarding a warrant to purchase one share of the Company’s
common stock at the price per share of $0.016 exercisable within three years. During years 2009, 2010 and 2011, the Company received
from Bio Tech Knowledge LLC additional interest free loans, with the same terms, in an aggregate amount of $92,500. The loans are
convertible to up to 11,562,500 shares of the Company's common stock, at a price of $0.008 per share, within 12 months from the
date of the grant, with each share of common stock such converted awarding a warrant to purchase one share of the Company’s
common stock at the price per share of $0.016 exercisable within three years.



Consistent with provisions of ASC 470-20, the
Company evaluated whether the notes contain a beneficial conversion feature ("BCF") and determined that in most cases
the BCF amount exceeded the amount of notes, and as a result the notes initially recorded at nil and are to be amortized over the
term of notes, which is one year (although as discussed below repayment or conversion did not occur during the one year period
which has expired).



On July 5, 2011 in the framework of the purchase
agreement, the convertible notes were converted into shares of the Company. See Note 7b.



b.On April 1, 2010, the Company received a
loan from Lindon Group Inc., Rhode Island Corporation (which is a related party of one of the company's major customers) in the
amount of $35,000, bearing a yearly interest of 6%, in the form of a promissory note. This loan was forgiven by Lindon group on
March 8, 2011, along with terminating its distribution agreement with the Company.







ACRO INC. AND ITS SUBSIDIARY

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

US Dollars



Note 6 - COMMITMENTS



On October 28, 2007, the Company’s technology
agreement with LSRI – Life Science Research Israel Ltd., a subsidiary of IIBR – Israel Institute for Biological Research,
became effective. Under the terms of the agreement, LSRI will license the technology of IIBR’s explosives testing kit (ETK)
to the Company, for incorporation into the Company’s pen-like device, allowing the detection of commercial and military explosives.
The agreement is subject to minimum annual revenues to be achieved by the Company and royalties to be paid to LSRI. The new device
complements the ACRO-P.E.T., the Company’s peroxide explosive tester for the detection of improvised explosives.





Note 7 – OTHER SIGNIFICANT CURRENT PERIOD EVENTS



a.
On April 14, 2011 a loan agreement was signed with Oren Fuerst and Noam Yellin (the lenders), according to which  the
company was to receive a loan of an aggregated amount of $53,000. ($26,500 from each), in a form of convertible promissory note.
As of May 23, 2011 the company received only $19,000. The lenders decided to withdraw from the agreement and not to lend the rest
of the money to the company. Therefore the company board of directors decided to cancel the agreement with the lenders. On July
26, 2011, as part of the share acquisition agreement signed by the Company, an amount of 4,828 thousand shares were issued
to Noam Yellin in consideration for waiver of the loan in the amount of $ 19,000.



b.  On
July 5, 2011 the Company entered into a share purchase agreement (the "Agreement") with Top Alpha Capital, an Israeli
corporation, (hereinafter – "Top Alpha") for the issue of 96,613,788 shares of common stock, representing 49.9%
of the Company outstanding share capital, for the total consideration of $160,000 ("Transaction"). The purchase price
was funded by available funds. As a result of this transaction, balances in the amount of $ 264,000 were deducted from the results
of the operations for the year in regard to waiver of debts.



Pursuant to the Agreement, simultaneously
with closing of the transaction the convertible notes held by BioTech Knowledge LLC in the aggregate amount of approximately $185,000
were converted into 23,221,750 shares of the Company common stock. In addition, at the closing all outstanding warrants and options
to purchase the Company shares were cancelled.



At the Closing of the transaction,
the Company was supposed to consummate a thousand-for-one reverse stock split of shares of common stock, and a proportional decrease
in the number of authorized shares of common stock from 700,000,000 to 700,000. This has not as yet occurred.



Following the closing of the transaction
and until six months thereafter, Top Alpha shall have the option to purchase the 11,195,623 shares of the Company common stock
held by Mr. Gadi Aner and by Mr. Zeev Bronfeld at a price per share of $0.0038.



Following the closing of the transaction
and until twelve months thereafter, Top Alpha shall have the option to purchase up to 15,515,052 of the shares held by BioTech
Knowledge LLC, at a price per share of $0.0018.







ACRO INC. AND ITS SUBSIDIARY

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

US Dollars



Note
7 – OTHER SIGNIFICANT CURRENT PERIOD EVENTS (cont.)



Pursuant to the Agreement, as long
as Mr. Aner and Mr. Bronfeld will hold any of the Company shares they hold as of the closing, they shall have the right to veto
any transaction with Top Alpha, e.g, the issuance of shares or compensation to Top Alpha.  This veto right shall terminate
upon any of the following events:  (a) a merger between the Company and another entity; (b) an asset acquisition by the Company;
(c) The Company’s purchase of shares of another entity, or (d) acquisition by a third party of a controlling interest in
the Company.  In any case, such veto right shall not apply to issue of additional shares to Top Alpha in the event the Company
shall have outstanding debts on the closing of the Transaction.  In such event, the Company shall issue Top Alpha shares
based on a company valuation of $160,000 proportionate to the outstanding debt.



Following the closing of the Transaction and
until six months thereafter, Top Alpha shall supply office services, management, consulting and investment banking services to
the Company at no cost.



Pursuant to the share purchase agreement between
the Company. and Top Alpha Capital, on July 28, 2011, Gadi Aner and Dan Einathan resigned as directors of the Company, and Asaf
Porat and Boris Mitsengendler   were appointed as directors until the next annual shareholders meeting.  On
July 28, 2011, Gabby Klausner resigned as Chief Financial Officer and treasurer, and Gadi Aner resigned as President and Chief
Executive Officer, and Asaf Porat was appointed Chief Executive Officer and President, and Chief Financial Officer.  Mr.
Porat is an interested party of Top Alpha Capital, a new controlling shareholder of the Company.

As a result of this transaction Top Alpha owns
49.9% of the Company's common stock.









* * * * * * * *













|Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------



You should read the following discussion in
conjunction with our consolidated financial statements and related notes thereto. In addition to historical information, this discussion
contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ
materially from management’s expectations. Our actual results could differ materially and adversely from those anticipated
in such forward-looking statements as a result of certain factors



This quarterly report contains forward-looking
statements as that term is defined in the Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934.  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 and market products for the detection
of military and commercial explosives for the homeland security market. We were incorporated under the laws of the State of Nevada
on May 22, 2002, under the name of 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. (Acrosec), incorporated under the laws of the State of Israel. Effective January
1, 2009, we entered into an Intellectual Property Assignment and Services Termination Agreement with our wholly owned subsidiary,
Acrosec Ltd., pursuant to which, among others, we effected a transfer of all of our intellectual property, including patents and
technology, to Acrosec, in consideration for an amount representing the value of the intellectual property as will be determined
by an independent third-party appraiser selected by us and Acrosec. Concurrently, the services agreement between us and Acrosec,
dated March 7, 2007, pursuant to which Acrosec provided us certain research, development, manufacturing and management services,
was terminated. The Intellectual Property Assignment and Services Termination Agreement effectively render ACRO as a holding company.



Initially, our business had been to provide professional
consulting services for the technical and economic evaluation of petroleum and natural gas resources.



However, since we were not successful in implementing
our initial business plan for consulting services, we decided to no longer offer consulting services to oil and gas companies.  Accordingly,
on March 15, 2006, we completed our acquisition of a patent for $120,000 pursuant to a patent purchase agreement with Prof. Ehud
Keinan, which we refer here as the Patent Purchase Agreement. The patent, U.S. Patent No. 6,767,717, describes a method of detection
of peroxide-based explosives. Through a consulting services agreement that we signed at the same time, Prof. Keinan, the inventor
of the method described in the patent, has agreed to provide consulting services to us in order to develop the patent into a commercially
viable product.  We are a development stage company with little history of research and development of explosives detection
equipment. We are currently contemplating to cease our current operations and purchase new technologies.



On January 19, 2006, we closed a private placement
consisting of 20,200,012 shares of common stock for total gross proceeds of $43,286 in the form of a promissory note payable upon
demand, in which Gadi Aner and Prof. Ehud Keinan, who were not directors at that time, and Zeev Bronfeld, beneficial owner of more
than 5% of our common stock, participated. Pursuant to the private placement, we issued, among others: (i) 2,300,004 shares of
common stock to Mr. Aner for a total consideration of $4,929; (ii) 2,800,000 Shares to M.G-Net Ltd., a private company, wholly-owned
by Mr. Aner and his wife, for a total consideration of $6,000; (iii) 5,999,994 shares of common stock to Mr. Bronfeld for a total
consideration of $12,857.13; and (iv) 6,400,002 shares of common stock to BioTech Knowledge LLC, a private company wholly-owned
by Prof. Keinan, for a total consideration of $13,714. In addition, pursuant to a share purchase agreement dated January 10, 2006,
two of our former directors, Nick DeMare and Brad Colby, sold their entire interests in us, 14,000,000 shares of common stock,
to BioTech Knowledge LLC.



On March 15, 2006, we consummated a second private
placement, pursuant to which, we issued to certain investors 2,376,000 shares of common stock, together with warrants to purchase
2,376,000 shares of common stock at an exercise price of $ 0.75 per share, exercisable until March 15, 2008, in consideration of
an aggregate gross proceeds of $1,188,000, less transaction cost of $ 99,031.



On February 27, 2007, the Company consummated
a private placement of 2,000,000 units, at a price of $0.75 per unit, for aggregate proceeds of $1,500,000, each unit comprising
one share of the Company’s common stock and one warrant to purchase one share of the Company’s common stock at an exercise
price per share of $1.25 exercisable within five years (“Unit”). In connection with the private placement, the Company
paid a finder’s fee of $120,000 in cash and issued a warrant to purchase 160,000 Units to the finder.



On February 22, 2009, we received from BioTech
Knowledge LLC an interest-free loan in the aggregate amount of $93,274 in the form of a convertible promissory note, convertible
into up to 11,659,250 shares of our common stock, at a price of $0.008 per share, within 12 months from February 22, 2009,
with each share of common stock such converted awarding a warrant to purchase one share of our common stock at the price per share
of $0.016 exercisable within three years



On March 15, 2010, we closed a private placement
of 500,000 units, at a price of $0.05 per unit, for aggregate proceeds of $25,000.  Each unit is comprised two shares
of our common stock and one warrant to purchase one share of our common stock at the price per share of $0.025, exercisable within
twelve months from March 15, 2010. In connection with this private placement, we issued the finder a warrant to purchase 40,000
shares of our common stock at a price per share of $0.025, exercisable within twelve months of the closing date.



During years 2009, 2010 and 2011, we received
from BioTech Knowledge LLC additional interest-free loan in the aggregate amount of $92,500 in the form of a convertible promissory
note, convertible into up to 11,562,500 shares of our common stock, at a price of $0.008 per share, within 12 months from March
24, 2010, with each share of common stock such converted awarding a warrant to purchase one share of our common stock at the price
per share of $0.016 exercisable within three years.



On April 14, 2011 a loan agreement was signed
with Oren Fuerst and Noam Yellin (the lenders), according to which we were supposed to receive a loan of an aggregated amount
of $53,000 ($26,500 from each), in a form of convertible promissory note. Of this amount, we received only $19,000 before the lenders
decided to withdraw from the agreement and not to lend us the rest of the money. The board of directors decided to cancel the agreement
with the lenders.



2011 Private Placement



On July 5, 2011, we entered into a share purchase agreement
(the "Agreement") with Top Alpha Capital, an Israeli corporation, for the sale of 96,613,788 shares of our common stock,
representing 49.9% of our outstanding share capital, for the total consideration of US$160,000 ("Transaction"). The purchase
price was funded by available funds. Top Alpha is a non-U.S. person (as that term is defined in Regulation S of the Securities
Act of 1933, as amended) and the issuance of the shares was made in an offshore transaction relying on Regulation S and/or Section
4(2) of the Securities Act of 1933, as amended.



The share purchase closed on July 28, 2011.



Pursuant to the Agreement, simultaneously with the closing of the
Transaction, the convertible notes held by BioTech Knowledge LLC in the aggregate amount of $185,774, were converted into 23,221,750
shares of our common stock. In addition, at the closing, all outstanding warrants and options to purchase our shares were cancelled.



As part of this Transaction, we are in the process of consummating
a thousand-for-one reverse stock split of our shares of common stock, and a proportional decrease in the number of authorized shares
of common stock from 700,000,000 to 700,000.



Following the closing of the Transaction and until six months thereafter,
Top Alpha shall have the option to purchase the 11,195,623 shares of our common stock held by Mr. Gadi Aner and the shares held
by Mr. Zeev Bronfeld at a price per share of $0.0038.



Following the closing of the Transaction and until twelve months
thereafter, Top Alpha shall have the option to purchase up to 15,515,052 of the shares held by BioTech Knowledge LLC, at a price
per share of $0.0018.



Pursuant to the Agreement,aslong as Mr.
Aner and Mr. Bronfeld will hold any of our shares they hold as of the closing, they shall have the right to veto any transaction
with Top Alpha, e.g, the issuance of shares or compensation to Top Alpha.  This veto right shall terminate upon any of the
following events:  (a) a merger between ACRO and another entity; (b) an asset acquisition by ACRO; (c) ACRO’s purchase
of shares of another entity, or (d) acquisition by a third party of a controlling interest in ACRO.  In any case, such veto
right shall not apply to issuance of additional shares to Top Alpha in the event ACRO shall have outstanding debts on the closing
of the Transaction.  In such event, we shall issue Top Alpha shares based on a company valuation of $160,000 proportionate
to the outstanding debt.



Following the closing of the Transaction and until six months thereafter,
Top Alpha shall supply office services, management, consulting and investment banking services to ACRO at no cost.



Effective as of the closing of the Transaction, all existing officers
and directors, except for Ehud Keinan resigned from their office, and the officers chosen by Top Alpha were appointed and stockholders
were asked by written consent to approve the election of Asaf Porat, the investment banker of Top Alpha, as a director.  Following
the closing, Top Alpha agreed to vote for the reappointment of Mr. Keinan as a director of ACRO until Mr. Keinan’s share
holdings shall comprise of less than ten percent (10%) of our outstanding common stock.



As a result of this transaction Top Alpha owns 49.9% of our common
stock.



Employees



As of November 14, 2011 we do not have any employees.  Mr.
Asaf Portat serves as the Chairman, Chief Executive Officer and Chief Financial Officer of ACRO, Inc.   Our subsidiary,
Acrosec, hired the services of Gadi Aner, who serves as our Chairman and our Chief Executive



Cash Requirements



We believe that awe will need additional funds to continue operations
over the next twelve months and for the implementation of our plan of operation and developing and commercializing our potential
explosive detection device.  We expect that we may have to raise funds through additional offerings of our securities.



At September 30, 2011 we had working capital
of $1,620.  We are now operating under minimal activity note, until we successfully raise additional funds or receive
a significant order to our products, according to this low volume of activity, we anticipate that we will require additional
funds of up to approximately $200,000 to keep activating our business for the next twelve-month period. In such event that we do
not generate sufficient revenues or raise sufficient additional funds by a public offering or a private placement, we will consider
alternative financing options, if any, or be forced to cease our operations.



Our Products



Our first product is called the Peroxide Explosives
Tester (ACRO-P.E.T.). ACRO-P.E.T. 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. ACRO-P.E.T. has been designed for rapid,
on-site detection of peroxide-based explosives. Its main advantages are high sensitivity, high selectivity, fast response, simple
operation, high mobility, small size and cost effectiveness. In November 2006, we completed the first production of the ACRO-P.E.T.
for evaluation by potential customers. In 2007, we developed a new version of ACRO-P.E.T. which enables easier verification of
peroxide-based explosives, such as triacetone triperoxide (TATP). In addition, in the new version we improved the sampling device
to enable easy and immediate sampling of suspicious liquids, in addition to all other forms of explosives, such as powder. The
new version has been available for sale since mid 2007.



In addition, we developed the ACRO-N.E.T. (Nitride
Explosives Tester), which detects the presence of commercial and military explosives. ACRO-N.E.T. incorporates into our pen-like
device the explosive testing kit of the Israel Institute for Biological Research (IIBR), licensed to us under an agreement dated
October 28, 2007, with a subsidiary of IIBR called Life Science Research Israel Ltd. (LSRI). ACRO-N.E.T. is based on the LSRI explosive
detecting kit, called ETK. The ETK is capable of identifying the full range of well known types of military and commercially available
explosives, and also of homemade explosives based on nitrate and chlorate salts. This device, ACRO-N.E.T., complements ACRO-P.E.T.
by providing the possibility to detect explosives other than TATP. Its operation system and advantages are the same as the ACRO-P.E.T.;
however, it uses different solutions and detects different explosives. We also signed several agreements with LSRI pursuant to
which we may distribute the ETK and ETK 5, exclusively, in several countries. The ETK’s kits complete our products.



The ACRO-SET is a sensitive, rapid and reliable
kit for field detection and identification of trace explosives. Weighing about one-quarter of a pound, this kit contains the ACRO-PET,
which detects improvised explosives such as TATP, and the ACRO-NET, which detects the entire range of the nitro explosives including
all conventional explosives, the improvised ammonium nitrate, ANFO, and urea nitrate. Conveniently packed in a belt pouch, the
Acro-SET is, in effect, a portable, inexpensive micro-laboratory for identification of all explosives by any law enforcement personnel.



Since the fourth quarter of 2007, we delivered
samples of ACRO-SET to several distributors and potential clients in many countries including the USA, UK, China, Canada, Spain,
Singapore, Japan, South Africa, Australia, Serbia, Italy, Germany, Luxemburg, South Korea, India, New Zealand and Russia.



During 2009, we had sales in the aggregate amount of
$73,358. During 2010, we had sales in the aggregate amount of $79,227.



ACRO-N.E.T. is based on the LSRI explosive detecting
kit, called ETK.   Nevertheless, we cannot assure that ACRO-P.E.T. and ACRO-N.E.T. will gain commercial acceptance
in the marketplace.



During 2008, we developed a product called “TATP
Simulant”. The TATP Simulant is a hands-on tool of practicing detection and identification of peroxide based explosives such
as TATP and HMTD. We delivered samples of TATP Simulant to several clients, but at this stage we cannot estimate the commercial
value of this product, if any.



During 2009, we developed the ACRO-CH.E.T. (Chlorates Explosives
Tester) which detects chlorate based explosives traces and the ACRO-U.E.T (Urea nitrate Explosives Tester) which detects the presence
urea nitrate traces. Both products have low false positive and negative alarm rates.



During the first quarter of 2010, we completed
the development, Acro-ANET, a specific tester and a trace-detector of ammonium nitrate. The white crystals of ammonium nitrate
are commonly used in agriculture as high-nitrogen fertilizer and are the main component of ammonium nitrate fuel oil (ANFO), an
increasingly popular component of improvised explosive devices.



We are currently contemplating to cease our current
operations and purchase new technologies.



Financial Condition, Liquidity and Capital Resources



Three Months Ended September 30, 2010 Compared to September 30,
2011.



During the three months ended September 30, 2011,
we had income of $292,166, compared to a net loss of $79,165 for the comparative period in 2010.



During the three months ended September 30, 2011,
we had $27,292 of operating income, $874 of interest income and $264,000 of income from forgiveness of debt.



During the three months ended September 30, 2010,
we incurred $81,361 of operating expenses, comprised of  $4,737 for research and development costs, $12,473 for interest
expenses, and $76,624 for general and administrative costs.



Nine Months Ended September 30, 2010
Compared to September 30, 2011.



During the nine months ended September 30, 2011,
we had a net income of $181,859, compared to a net loss of  $217,206 for the comparative period in 2010. The difference
in income is due primarily to income we received as a result of forgiveness of certain outstanding loans.



During the nine months ended September 30, 2011,
we incurred $84,965 of operating expenses, comprised of  $85,133 of general and administrative expenses and offset by
research and development income of $168.



During the nine months ended September 30, 2010,
we incurred $283,246 of operating expenses, comprised of  $64,856 for research and development costs, $4,215 of sales
and marketing expenses, $214,175 for general and administrative costs.



As of September 30, 2011, we had working capital
of $1,620.



As of September 30, 2011, we had total assets
of $45,219, which consisted of cash and equivalents of $207, trade receivables of $455, account and other receivables of $36,425
and property and equipment of $8,132.



From January 1, 2011 to September 30, 2011, we
had sales of $3,300.



Going Concern



The continuation of our business is dependent
upon our raising additional financial support or on our ability to purchase new technologies. 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 from
inception through September 30, 2011, we have incurred losses of $4,282,649. Because of these historical losses, we will require
additional working capital to develop our business operations.



There can be no assurance that additional funds
will be available on terms acceptable to us, or at all. These conditions raise substantial doubt about our ability to continue
to operate as a going concern. The audited financial statements attached to this annual report do not include any adjustments to
reflect the possible future effect on the recoverability and classification of assets or the amounts and classification of liabilities
that may result from the outcome of this uncertainty.



Recent Private Placements



On February 27, 2007, we closed a private placement
of 2,000,000 units, at a price of $0.75 per unit, for aggregate proceeds of $1,500,000. Each unit comprised one share of our common
stock and one warrant to purchase one share of our common stock at the price per share of $1.25 exercisable within five years.
In connection with the private placement, we paid a finder’s fee of $120,000 in cash and issued a warrant to purchase 160,000
units to the finder.



On March 15, 2010, we closed a private placement
of 500,000 units, at a price of $0.05 per unit, for aggregate proceeds of $25,000.  Each unit is comprised two shares
of our common stock and one warrant to purchase one share of our common stock at the price per share of $0.025, exercisable within
twelve months from closing date (i.e. March 15, 2011). In connection with this private placement, we issued the finder a warrant
to purchase 40,000 shares of our common stock at a price per share of $0.025, exercisable within twelve months of the closing date.



On July 28, 2011, we closed a share purchase
pursuant to which Top Alpha Capital, an Israeli Corporation (“TAC”) purchased a total of 96,613,77 shares of our common
stock, representing 49.9% of our outstanding common stock, for $160,000 (the “Transaction”).  This offering
was conducted pursuant to Regulation S and/or Section 4(2) of the Securities Act of 1933.



Pursuant to the Agreement, simultaneously with
the closing of the Transaction, the convertible notes held by BioTech Knowledge LLC in the aggregate amount of $185,774, were converted
into 23,221,750 shares of our common stock. In addition, at the closing, all outstanding warrants and options to purchase our shares
were cancelled.



As part of this Transaction, we are in the process
of consummating a thousand-for-one reverse stock split of our shares of common stock, and a proportional decrease in the number
of authorized shares of common stock from 700,000,000 to 700,000.



Following the closing of the Transaction and
until six months thereafter, Top Alpha shall have the option to purchase the 11,195,623 shares of our common stock held by Mr.
Gadi Aner and the shares held by Mr. Zeev Bronfeld at a price per share of $0.0038.



Following the closing of the Transaction and
until twelve months thereafter, Top Alpha shall have the option to purchase up to 15,515,052 of the shares held by BioTech Knowledge
LLC, at a price per share of $0.0018.



Pursuant to the Agreement,aslong
as Mr. Aner and Mr. Bronfeld will hold any of our shares they hold as of the closing, they shall have the right to veto any transaction
with Top Alpha, e.g, the issuance of shares or compensation to Top Alpha.  This veto right shall terminate upon any of the
following events:  (a) a merger between ACRO and another entity; (b) an asset acquisition by ACRO; (c) ACRO’s purchase
of shares of another entity, or (d) acquisition by a third party of a controlling interest in ACRO.  In any case, such veto
right shall not apply to issuance of additional shares to Top Alpha in the event ACRO shall have outstanding debts on the closing
of the Transaction.  In such event, we shall issue Top Alpha shares based on a company valuation of $160,000 proportionate
to the outstanding debt.



Following the closing of the Transaction and
until six months thereafter, Top Alpha shall supply office services, management, consulting and investment banking services to
ACRO at no cost.



Effective as of the closing of the Transaction,
all existing officers and directors, except for Ehud Keinan resigned from their office, and the officers chosen by Top Alpha were
appointed and stockholders were asked by written consent to approve the election of Asaf Porat, the investment banker of Top Alpha,
as a director.  Following the closing, Top Alpha agreed to vote for the reappointment of Mr. Keinan as a director of
ACRO until Mr. Keinan’s share holdings shall comprise of less than ten percent (10%) of our outstanding common stock.



As a result of this transaction Top Alpha owns
49.9% of our common stock.



Critical Accounting Policies



Share Based Compensation



The Company accounts for stock-based awards to
employees in accordance with (ASC) 718-10 and related interpretations, which requires all share-based payments to employees to
be recognized based on their fair values.  The Company recorded the stock based compensation granted to a consultant
on the date the consultant earned the awarded shares in the same manner as if the Company paid cash to the consultant for his services.



The Company accounts for convertible debt with
beneficial conversion feature in accordance with ASC 470-20, which requires the Company to recognize separately, at issuance, the
embedded beneficial conversion feature in additional paid-in capital. The recognition is done by allocating a portion of the proceeds
equal to the intrinsic value of that feature in additional paid-in capital. The intrinsic value is calculated as the difference
between the effective conversion price of the convertible debt and the fair value of the shares at issuance date.



The Company accounts for intangible assets in
accordance with ASC 360-10 under which recoverability of assets are tested whenever events or changes in circumstances indicate
that its carrying amount may not be recoverable.



The financial hardship of the Company together
with the difficulties in sales experienced in the recent year and lack of forecasted improvement, led the Company to evaluate the
recoverability of its intangible assets. The result of the evaluation was the decision that the intangible assets are not recoverable
and should be written off entirely.



|Item 3. | Quantitative and Qualitative Disclosures about Market Risk
|------- | ----------------------------------------------------------



Not applicable.





|Item 4T. | Controls and Procedures
|-------- | -----------------------



As of the end of the period covered by this report,
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 annual 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, is accumulated
and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons
performing similar functions, as appropriate to allow timely decisions regarding required disclosure. 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 15d – 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.



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. Our disclosure controls and procedures are designed to provide reasonable assurance of
achieving the desired control objectives.



There were no changes in our internal controls
over financial reporting identified with the evaluation thereof that occurred during the quarter ended September 30, 2011, that
have materially affected, or are reasonable likely to materially affect our internal control over financial reporting.





Part II — OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------



There are no material legal proceedings to which
we are a party, other than ordinary routine litigation incidental toour business.



|Item 1A. | Risk Factors
|-------- | ------------



Not applicable.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------



On July 5, 2011, we entered into a share purchase
agreement (the "Agreement") with Top Alpha Capital, an Israeli corporation, for the sale of 96,613,788 shares of our
common stock, representing 49.9% of our outstanding share capital, for the total consideration of US$160,000 ("Transaction").
The purchase price was funded by available funds. Top Alpha is a non-U.S. person (as that term is defined in Regulation S of the
Securities Act of 1933, as amended) and the issuance of the shares was made in an offshore transaction relying on Regulation S
and/or Section 4(2) of the Securities Act of 1933, as amended.



The share purchase closed on July 28, 2011.



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------



None.



|Item 4. | [Removed and Reserved]
|------- | ----------------------





|Item 5. | Other Information
|------- | -----------------



None.



|Item 6. | Exhibits
|------- | --------



The exhibits listed in the Exhibit Index
immediately preceding the exhibits are filed as part of this quarterly report on Form 10-Q and such Exhibit Index is incorporated
herein by reference.









SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                        | ACRO INC.    |                                                
|----------------------- | ------------ | -----------------------------------------------
|                        | (Registrant) |                                                
|                        |              |                                                
|Date: November 14, 2011 | By:          | /s/ Asaf Porat                                 
|                        |              | Asaf Porat                                     
|                        |              | President, Chief Executive Officer & Director ,
|                        |              | Chief Financial Officer                        
|                        |              |                                                
|                        |              |                                                
|                        |              |                                                
|                        |              |                                                
|                        |              |                                                
|                        |              |                                                













Exhibit Index



|Number |  | Description                                                                                                              |  | Method of Filing                                                                                                  
|------ |  | ------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------------------------------------------------------------------------------------
|       |  |                                                                                                                          |  |                                                                                                                   
|(3)    |  | Articles of Incorporation and By-laws                                                                                    |  |                                                                                                                   
|       |  |                                                                                                                          |  |                                                                                                                   
|3.1    |  | Articles of Incorporation, as amended.                                                                                   |  | Incorporated by reference to Exhibit 3.1 to our registration statement on Form SB-2 filed November 21, 2003       
|       |  |                                                                                                                          |  |                                                                                                                   
|3.2    |  | Bylaws, dated February 25, 2005.                                                                                         |  | Incorporated by reference to Exhibit 3.1 to our current report on Form 8-K filed March 17, 2005 and March 21, 2005
|       |  |                                                                                                                          |  |                                                                                                                   
|3.3    |  | Certificate of Change Pursuant to NRS 78.209 filed with the State of Nevada effective as of January 25, 2006.            |  | Incorporated by reference to Exhibit 3.3 to our annual report on Form 10-KSB filed March 28, 2007                 
|       |  |                                                                                                                          |  |                                                                                                                   
|3.4    |  | Certificate of Change Pursuant to NRS 78.209 filed with the State of Nevada effective as of October 25, 2006.            |  | Incorporated by reference to Exhibit 3.4 to our annual report on Form 10-KSB filed March 28, 2007                 
|       |  |                                                                                                                          |  |                                                                                                                   
|3.5    |  | Certificate of Change Pursuant to NRS 78.209 filed with the State of Nevada effective as of October 30, 2006.            |  | Incorporated by reference to Exhibit 3.5 to our annual report on Form 10-KSB filed March 28, 2007                 
|       |  |                                                                                                                          |  |                                                                                                                   
|(10)   |  | Material Contracts                                                                                                       |  |                                                                                                                   
|       |  |                                                                                                                          |  |                                                                                                                   
|10.1   |  | Agreement and Plan of Merger for the Merger of ACRO Inc. with and into Medina International Corp., dated April 25, 2006. |  | Incorporated by reference to Exhibit 10.2 to our current report on Form 8-K filed May 4, 2006                     
|       |  |                                                                                                                          |  |                                                                                                                   
|10.2   |  | Patent Purchase Agreement between the Registrant and Prof. Ehud Keinan, dated February 1, 2006.                          |  | Incorporated by reference to Exhibit 10.1 to our current report on Form 8-K filed February 3, 2006                
|       |  |                                                                                                                          |  |                                                                                                                   
|10.3   |  | Consulting Agreement between the Registrant and BioTech Knowledge LLC, dated February 1, 2006.                           |  | Incorporated by reference to Exhibit 10.2 to our current report on Form 8-K filed February 3, 2006                
|       |  |                                                                                                                          |  |                                                                                                                   
|10.4   |  | Letter of Agreement between the Registrant and BioTech Knowledge LLC, dated February 1, 2006.                            |  | Incorporated by reference to Exhibit 10.3 to our current report on Form 8-K filed February 3, 2006                
|       |  |                                                                                                                          |  |                                                                                                                   
|10.5   |  | Advisory Board Agreement between the Registrant and Prof. Richard E. Lerner, dated May 31, 2006.                         |  | Incorporated by reference to Exhibit 99.2 to our current report on Form 8-K filed June 5, 2006                    
|       |  |                                                                                                                          |  |                                                                                                                   
|10.6   |  | Advisory Board Agreement between the Registrant and Prof. K. Barry Sharpless, dated September 28, 2006.                  |  | Incorporated by reference to Exhibit 10.8 to our annual report on Form 10-KSB filed March 28, 2007                
|       |  |                                                                                                                          |  |                                                                                                                   









|10.7  |  | Consulting Agreement between Acrosec Ltd. and M.G NET Ltd., dated March 26, 2007                                                                                            |  | Incorporated by reference to Exhibit 10.10 to our annual report on Form 10-KSB filed March 28, 2007
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------
|      |  |                                                                                                                                                                             |  |                                                                                                    
|10.8  |  | Cooperation and Licensing Agreement between the Registrant and Life Science Research Israel Ltd., dated October 28, 2007.                                                   |  | Incorporated by reference to Exhibit 10.11 to our annual report on Form 10-KSB filed March 13, 2008
|      |  |                                                                                                                                                                             |  |                                                                                                    
|10.9  |  | Intellectual Property Assignment and Services Termination Agreement, dated March 30, 2009.                                                                                  |  | Incorporated by reference to Exhibit 10.12 to our annual report on Form 10-K filed March 30, 2009  
|      |  |                                                                                                                                                                             |  |                                                                                                    
|10.10 |  | Convertible Promissory Note between the Registrant and BioTech Knowledge LLC, dated February 22, 2009.                                                                      |  | Incorporated by reference to Exhibit 10.1 to our current report on Form 8-K filed February 23, 2009
|      |  |                                                                                                                                                                             |  |                                                                                                    
|10.11 |  | Warrant between the Registrant and BioTech Knowledge LLC, dated February 22, 2009.                                                                                          |  | Incorporated by reference to Exhibit 10.14 to our annual report on Form 10-K filed March 30, 2009  
|      |  |                                                                                                                                                                             |  |                                                                                                    
|10.12 |  | Convertible Promissory Note between the Registrant and BioTech Knowledge LLC, dated March 24, 2010.                                                                         |  | Incorporated by reference to Exhibit 10.12 to our annual report on Form 10-K filed March 29, 2010  
|      |  |                                                                                                                                                                             |  |                                                                                                    
|10.13 |  | Warrant between the Registrant and BioTech Knowledge LLC, dated March 24, 2010.                                                                                             |  | Incorporated by reference to Exhibit 10.13 to our annual report on Form 10-K filed March 29, 2010  
|      |  |                                                                                                                                                                             |  |                                                                                                    
|10.14 |  | The Registrant’s 2008 Israeli Share Option Plan                                                                                                                             |  | Incorporated by reference to Exhibit 10.1 to our current report on Form 8-K filed May 1, 2008      
|      |  |                                                                                                                                                                             |  |                                                                                                    
|10.15 |  | Finders Agreement between the Registrant and Siden Investment Inc. dated March 13, 2010.                                                                                    |  | Incorporated by reference to Exhibit 10.15 to our annual report on Form 10-K filed March 29, 2010  
|      |  |                                                                                                                                                                             |  |                                                                                                    
|10.16 |  | Promissory Note between the Registrant and Lindon Group, dated April 1, 2010.                                                                                               |  | Incorporated by reference to Exhibit 10.16 to our quarterly report on Form 10-Q filed May 20, 2010 
|      |  |                                                                                                                                                                             |  |                                                                                                    
|(31)  |  | Section 302 Certification                                                                                                                                                   |  |                                                                                                    
|      |  |                                                                                                                                                                             |  |                                                                                                    
|31.1  |  | Certification of Principal Executive Officer and Principal Financial Officer Rule 13a-14(a) pursuant to Rule13a- 14(a) of the Securities Exchange Act of 1934.              |  | Filed herewith                                                                                     
|      |  |                                                                                                                                                                             |  |                                                                                                    
|(32)  |  | Section 906 Certification                                                                                                                                                   |  |                                                                                                    
|      |  |                                                                                                                                                                             |  |                                                                                                    
|32.1  |  | Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, required by Section 906 of the Sarbanes-Oxley Act of 2002. |  | Filed herewith