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 June 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 EmployerIncorporation 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 oNon-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 August 15, 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

2Item 1. Financial Statements

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

11Item 3. Quantitative and Qualitative Disclosures about Market Risk

15Item 4T. Controls and Procedures

16PART II. OTHER INFORMATION

17Item 1. Legal Proceedings

17Item 1A. Risk Factors

17Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

17Item 3. Defaults Upon Senior Securities

17Item 4. [Removed and Reserved]

17Item 5. Other Information

17Item 6. Exhibits

17Signatures

18Exhibit Index

19Certification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification Pursuant to U.S.C. Section 1350




2


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.




3


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.




4


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.




5


Employees




As of August 15, 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 June 30, 2011 we had a deficit in working capital of $(473,191).  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.


6


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 June 30, 2010 Compared to June 30, 2011.




During the three months ended June 30, 2011, we incurred a loss of $53,243, compared to a net loss of $70,763 for the comparative period in 2010.




During the three months ended June 30, 2011, we incurred $31,836 of operating expenses, $5,836 for stock-based compensation expenses and $26,000 for general and administrative cost.




During the three months ended June 30, 2010, we incurred $119,691 of operating expenses, comprised of  $43,021 for research and development costs, $5,836 for stock-based compensation expenses, $70,834 for general and administrative costs.




Six Months Ended June 30, 2010 Compared to June 30, 2011.




During the six months ended June 30, 2011, we incurred a loss of $110,307, compared to a net loss of  $151,011 for the comparative period in 2010.




During the six months ended June 30, 2011, we incurred $112,257 of operating expenses, comprised of  $2,949 for research and development costs, $11,672 for stock-based compensation expenses and  $97,636 for general and administrative costs.




During the six months ended June 30, 2010, we incurred $214,885 of operating expenses, comprised of  $60,132 for research and development costs, $11,672 for stock-based compensation expenses, $4,202 for sales and marketing costs, $138,879 for general and administrative cost.




As of June 30, 2011, we had deficit in working capital of $473,191.




As of June 30, 2011, we had total assets of $33,309, which consisted of cash and equivalents of  $1,598 ,fixed assets of  $10,777, prepaid expenses and other current, non-current assets of  $20,934.




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


7


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 June 30, 2011, we have incurred losses of  $4,574,816. 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. We are also currently committed to loans repayment of approximately $204,774, as described in detail in under “General”.




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.




8


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.





9


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 June 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]




10


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.


















































11


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: August 18, 2011
By:
/s/ Asaf PoratAsaf PoratPresident, Chief Executive Officer & Director ,Chief Financial Officer
































12


Exhibit Index




Number

Description

Method of Filing(3)

Articles of Incorporation and By-laws3.1

Articles of Incorporation, as amended.

Incorporated by reference to Exhibit 3.1 to our registration statement on Form SB-2 filed November 21, 20033.2

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, 20053.3

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, 20073.4

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, 20073.5

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 Contracts10.1

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, 200610.2

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, 200610.3

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, 200610.4

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, 200610.5

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, 200610.6

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


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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, 200710.8

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, 200810.9

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, 200910.10

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, 200910.11

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, 200910.12

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, 201010.13

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, 201010.14

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, 200810.15

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, 201010.16

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 Certification31.1

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 Certification32.1

Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, required bySection 906 of the Sarbanes-Oxley Act of 2002.

Filed herewith


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