---

---

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

# FORM 10-QSB

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

For the quarterly period ended September 30, 2006

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

For the transition period from ______________ to ______________

Commission
file number 000-50482

|ACRO
INC.
|---------

|
|

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

|Nevada | 98-0377767
|------ | ----------

| | 
| | 

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

|7
Jabotinsky St, Aviv Tower , Ramat Gan 52520, Israel
|-----------------------------------------------------

|
|

|(Address
of Principal Executive Offices)
|----------------------------------------

|972-3-6134921
|-------------

|
|

|(Issuers
Telephone Number, Including Area Code)
|------------------------------------------------

|Former
Address: 18 Halevna Street, Timrat, Israel 23840
|-------------------------------------------------------

|
|

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

Check
whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of
the Exchange Act during the past 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.

Yes x No o

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

Yes o No x

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

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

Yes o     No o

# APPLICABLE ONLY TO
CORPORATE ISSUERS

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

# 64,748,356 shares of
common stock issued and outstanding at October 31, 2006

Transitional Small Business
Disclosure Format (Check one):

Yes o No x



---

---



# Item 1. Financial
Statements.

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

|ACRO Inc. (formerly Medina International Corp.)
(a Development Stage Company)
Consolidated Financial Statements
|---------------------------------------------------------------------------------------------------------------
|                                                                                                               
|Consolidated Balance Sheets (Unaudited)                                                                        
|                                                                                                               
|                                                                                                               

|                                                              | September 30,
2006 | December 31,
2005
|------------------------------------------------------------- | ------------------ | -----------------
|
|
|
|
|Assets                                                        |                    |                  
|                                                              |                    |                  
|Current assets:                                               |                    |                  
|Cash and cash equivalents                                     |                    |                  
|Prepaid expenses and other current assets                     |                    |                  
|                                                              |                    |                  
|                                                              |                    |                  
|Total current assets                                          |                    |                  
|                                                              |                    |                  
|                                                              |                    |                  
|Other non-current assets                                      |                    |                  
|Property and equipment, net                                   |                    |                  
|Intangible assets, net                                        |                    |                  
|                                                              |                    |                  
|                                                              |                    |                  
|Total assets                                                  |                    |                  
|                                                              |                    |                  
|                                                              |                    |                  
|Liabilities and stockholders' equity (deficit)                |                    |                  
|                                                              |                    |                  
|Current liabilities:                                          |                    |                  
|Accounts payable and accrued liabilities                      |                    |                  
|                                                              |                    |                  
|                                                              |                    |                  
|Total current liabilities                                     |                    |                  
|                                                              |                    |                  
|                                                              |                    |                  
|Commitments (Note 9)                                          |                    |                  
|                                                              |                    |                  
|Stockholders' equity (deficit):                               |                    |                  
|Common stock; $0.001 par value; 700,000,000 shares authorized |                    |                  
|64,748,356 and 42,000,000 shares issued and outstanding as of |                    |                  
|September 30, 2006 and December 31, 2005, respectively        |                    |                  
|Additional paid-in capital                                    |                    |                  
|Accumulated deficit                                           |                    |                  
|                                                              |                    |                  
|                                                              |                    |                  
|Total stockholders' equity (deficit)                          |                    |                  
|                                                              |                    |                  
|                                                              |                    |                  
|Total liabilities and stockholders' equity (deficit)          |                    |                  
|                                                              |                    |                  

2

---

---



|ACRO Inc. (formerly Medina International Corp.)
(a development Stage Company)
Consolidated Financial Statements
|---------------------------------------------------------------------------------------------------------------
|                                                                                                               
|Consolidated Statements of Operations (Unaudited)                                                              
|                                                                                                               
|                                                                                                               

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

* Includes $172,344 and $448,158 in
stock-based compensation to non-employees for the three and nine months ended September
30, 2006, respectively.

See accompanying notes to the
consolidated financial statements.

3

---

---



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

|                                               | Shares | Common
stock | Additional
Paid-In
Capital | Deficit
Accumulated
During the
Development
Stage | Total
Stockholders'
Equity
(Deficit)
|---------------------------------------------- | ------ | ------------ | -------------------------- | ------------------------------------------------ | ------------------------------------
|
|
|
|
|Inception, May 22, 2002                        |        |              |                            | -                                                |                                     
|                                               |        |             
|Sale of common stock for cash                  |        |              |                            | 14,000,000                                       |                                     
|Net loss for the period                        |        |              |                            | -                                                |                                     
|                                               |        |              |                            |                                                  |                                     
|                                               |        |             
|Balance as at                                  |        |             
|December 31, 2002                              |        |              |                            | 14,000,000                                       |                                     
|Services contributed
 by officers              |        |              |                            | -                                                |                                     
|Sale of common stock                           |        |             
|for cash                                       |        |              |                            | 28,000,000                                       |                                     
|Offering costs                                 |        |              |                            | -                                                |                                     
|Net loss for the year                          |        |              |                            | -                                                |                                     
|                                               |        |              |                            |                                                  |                                     
|                                               |        |             
|Balance as at
December 31, 2003                |        |              |                            | 42,000,000                                       |                                     
|Net loss for the year                          |        |              |                            | -                                                |                                     
|                                               |        |              |                            |                                                  |                                     
|                                               |        |             
|Balance as at
 December 31, 2004               |        |              |                            | 42,000,000                                       |                                     
|Net loss for the year                          |        |              |                            | -                                                |                                     
|                                               |        |              |                            |                                                  |                                     
|                                               |        |             
|Balance as at
December 31, 2005                |        |              |                            | 42,000,000                                       |                                     
|Issuance of common                             |        |             
|stock on January 19, 2006                      |        |              |                            | 20,200,012                                       |                                     
|Issuance of common
 stock on March 15, 2006    |        |              |                            | 2,376,000                                        |                                     
|Offering costs                                 |        |              |                            |                                                  |                                     
|Issuance of common stock
 on September 5, 2006 |        |              |                            | 172,344                                          |                                     
|Stock-based compensation                       |        |             
|to non-employees                               |        |              |                            | -                                                |                                     
|Net loss for the period                        |        |              |                            | -                                                |                                     
|                                               |        |              |                            |                                                  |                                     
|                                               |        |             
|Balance as at                                  |        |             
|September 30, 2006                             |        |              |                            | 64,748,356                                       |                                     
|                                               |        |              |                            |                                                  |                                     

See accompanying notes to the consolidated
financial statements

4

---

---



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

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

See accompanying notes to the
consolidated financial statements.

5

---

---



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

# Note 1  Business

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

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

| | The
accompanying financial statements have been prepared assuming that the Company will
continue as a going concern. The Company has net losses for the period from inception (May
22, 2002) through September 30, 2006 of $1,036,000. The Companys inability to raise
additional capital over the next several months on terms and within an acceptable
timeframe could force the Company to dramatically reduce its expenses, delay, scale back,
or eliminate certain of its planned activities and operations, including its research and
development activities, any of which could have a material adverse effect on the
Companys business, financial condition and results of operations.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Note 2  Summary of
Accounting Policies

| | A. | Basis
of presentation
| | -- | ---------------------

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

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

6

---

---



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

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

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

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

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

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

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

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

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

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

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

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

7

---

---



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

# Note 3  Property
and Equipment, Net

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

| | Depreciation
expense for the three months ended September 30, 2006 and 2005 and for the cumulative
period from May 22, 2002 (date of inception) to September 30, 2006 was $4,870, $0 and
$4,916, respectively.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Note 4  Intangible
Assets

| | In
March 2006, the Company purchased a patent from Ehud Keinan (Keinan), a
stockholder who holds 32.9% of the Companys shares of common stock, for $120,000.
The patent is being amortized over the life of the asset which is estimated at 10 years.
Amortization expense for the three and nine months ended September 30, 2006 and for the
cumulative period from May 22, 2002 (date of inception) to September 30, 2006 was $3,000,
$6,493 and $6,493, respectively.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Note 5  Loss per
Share

| | The
Company computes basic loss per share by dividing net loss by the weighted average number
of shares of common stock outstanding during the respective period; after giving
retroactive effect to the stock splits that occurred during January 2006 and subsequent to
the balance sheet date (effective October 30, 2006) (see Note 6). Warrants to purchase
2,376,000 shares of common stock, issued in March 2006 at an exercise price of $0.75 per
share, were excluded from the computation of diluted net loss per share for the applicable
three and nine months ended September 30, 2006, as such warrants were anti-dilutive since
the Company incurred a loss in these periods. No warrants were outstanding as of September
30, 2005 and December 31, 2005.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Note 6  Stock
Transactions

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

8

---

---



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

# Note 6  Stock
Transactions (contd)

| | On
January 19, 2006, the Company consummated a private placement (the January 2006
Private Placement) pursuant to which the Company issued to certain investors
20,200,012 shares of common stock in consideration of a promissory note payable upon
demand issued by such investors to the company, in an aggregate gross proceeds of
approximately $43,286. The promissory note was paid in full by such investors in March
2006. In addition, pursuant to a share purchase agreement, two of the Companys
existing stockholders sold their entire interests in the Company to a new stockholder who
also participated in the January 2006 Private Placement, resulting in a change of control
in the Company.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
March 15, 2006, the Company consummated a second private placement (the March 2006
Private Placement) pursuant to which the Company issued to certain investors
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 aggregate gross proceeds of $1,188,000, less offering costs of $99,031.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
September 5, 2006, pursuant to advisory board agreements entered into during the second
quarter of 2006 (see note 7), the Board of Directors approved the issuance of 172,344
shares of common stock to consultants for advisory board services received during the
second quarter of 2006.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
October 21, 2006, the Companys Board of Directors approved a 2:1 stock split
effective October 30, 2006. As a result, the authorized capital will change from
350,000,000 to 700,000,000 shares of common stock. The stock split did not vary the par
value of the common stock. All stock figures and per share data have been retroactively
restated to reflect the stock split.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Note 7 
Stock-Based Compensation

| | In
April 2006, the Company appointed a new member to serve on its advisory board. The member
will receive a grant of 166,666 shares of common stock for each quarter of service on the
advisory board provided to the Company. On September 30, 2006, the member was entitled to
receive 333,332 shares with a total fair market value of $416,665 of which, 166,666 shares
were issued as of September 30, 2006. Stock based compensation expense for the three and
nine months ended September 30, 2006 was $249,999 and $416,665 respectively.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
April 2006, the Companys subsidiary, ACROSEC Ltd., entered into an employment
agreement for a new Chief Executive Officer (CEO) for the subsidiary and for
the Company. The CEO will receive a monthly salary of $7,600, will be entitled to
participate in the Employee Stock Incentive Plan, and will be issued up to 1,937,280
restricted shares of Common Stock or options to buy such shares representing 3% of the
Companys issued and outstanding share capital, when an option plan is adopted by the
Company. These options will be subject to a vesting period of three years commencing April
23, 2006. As of September 30, 2006, no approval had been given by the Board of Directors
for the option grant. Thus, no option grant date was established and therefore, no
compensation expense was incurred by the Company for the reported periods.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
May 2006, the Company appointed an additional member to serve on its advisory board. The
member will receive a grant of 16,666 shares of common stock for each quarter of service
on the advisory board provided to the Company, not to exceed 200,000 shares. On September
30, 2006, the member was entitled to receive 22,344 shares with a total fair market value
of $30,677 of which, 5,678 shares were issued as of September 30, 2006. Stock based
compensation expense for the three and nine months ended September 30, 2006 was $24,999
and $30,677 respectively.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9

---

---



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

# Note 7 
Stock-Based Compensation (contd)

| | In September 2006, the Company entered into an agreement with a director.
 As compensation, the Director will receive a signing bonus of $5,000, a
quarterly fee of $1,500, and for each meeting, $500 for attendance in person or $100 for
attendance via teleconference. In addition, subject to approval of the Board of Directors
and adoption of a Stock Option Plan, the Company will grant the Director 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. At the end of each quarter, the Director may purchase
up to 17,936 shares of the total shares granted. As of September 30, 2006, no option plan
has been adopted by the Company and no approval has been given by the Board of Directors
for the option grant. Therefore, no option grant date was established and as a result, no
compensation expense was incurred by the Company for the reported periods.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
September 2006, the Companys subsidiary, ACROSEC Ltd., entered into an employment
agreement for a new Chief Operating Officer (COO). The COO will receive a
monthly salary of NIS 15,000 for the first three months as a part-time COO and NIS 25,000
thereafter as a full time COO. The COO will also be entitled to participate in the
Employee Stock Incentive Plan when an option plan is adopted by the Company. As of
September 30, 2006, no option plan has been adopted by the Company and no approval has
been given by the Board of Directors for an option grant. Therefore, no option grant date
was established and as a result, no compensation expense was incurred by the Company for
the reported periods.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
September 2006, the Company appointed an additional member to serve on its advisory board.
The member will receive a grant of 16,666 shares of common stock for each quarter of
service on the advisory board provided to the Company, not to exceed 200,000 shares. At
September 30, 2006, the member was entitled to receive 544 shares with a total fair market
value of $816 for services during the three months ended September 30, 2006. Stock based
compensation expense for the three and nine months ended September 30, 2006 was $816
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
December 2004, the FASB issued Statement No. 123(R) Share-Based Payment. This
statement requires that stock-based compensation be recognized as a cost in the financial
statements and that such cost be measured based on the fair value of the stock-based
compensation. As of January 1, 2006 the Company has adopted this statement. As of
September 30, 2006, no options have been granted or issued however, stock-based awards
amounting to 356,220 shares have been earned by consultants of which 172,344 have been
granted. As a result, the Company has incurred stock-based compensation expenses of
$448,158 for the nine months ending September 30, 2006, which was based on the closing
market prices at June 30, 2006 and September 30, 2006.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Note 8  Related
Party Transactions

| | In
February 2006, the Company entered into a consulting services agreement (the
Consulting Agreement) with a limited liability company wholly-owned by Keinan
(see Note 4), whereby Keinan has agreed to provide consulting services for duration of
three years at a monthly fee of $3,000. The Company may terminate the Consulting Agreement
with 60 days notice. During the nine month period ended September 30, 2006, the Company
incurred $21,000 for the consulting services provided by Keinan. In addition to the
consulting agreement, the Company purchased a patent from Keinan in March 2006 (see Note
4).
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
the nine month period ended September 30, 2006, the Company incurred an expense of
approximately $39,565 for consulting services provided by the Companys Chairman of
the Board of Directors.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10

---

---



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

# Note 8  Related
Party Transactions (contd)

| | During
the nine-month period ended September 30, 2005, the Company incurred an expense of $5,775
for accounting and administrative services provided by a company owned by a former
director of the Company.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Note 9  Commitments

| | On
June 7, 2006 and September 12, 2006, the Company entered into two non-cancellable vehicle
operating leases with terms of 36 months each. The minimum future lease payments under
these leases at September 30, 2006 are:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

# Note 10 
Subsequent Event

| | On
October 8, 2006, the Company entered into a lease agreement for office space cancelable at
any time with 30 days notice for $1,750 per month.
| | ------------------------------------------------------------------------------------------------------------------------------------------------

# Note 11  Recently
Issued Accounting Pronouncements

| | In
May 2005, the FASB issued Statement 154, Accounting Changes and Error Corrections
 a replacement of APB Opinion No. 20 and FASB Statement No. 3, or (SFAS No.
154). SFAS No. 154 changes the accounting for and reporting of a change in
accounting principle. The provisions of SFAS No. 154 require, unless impracticable,
retrospective application to prior periods financial statements of (i) all voluntary
changes in accounting principles and (ii) changes required by a new accounting
pronouncement, if a specific transition is not provided. SFAS No. 154 also requires that a
change in depreciation, amortization, or depletion method for long-lived, non-financial
assets be accounted for as a change in accounting estimate, which requires prospective
application of the new method. SFAS No. 154 is effective for all accounting changes made
in fiscal years beginning after December 12, 2005. The Companys adoption of SFAS No.
154 is not expected to have a material effect on the Companys consolidated results
of operations or financial position.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
September 2006, the FASB issued Statement No. 157, Fair Value Measurements,
(SFAS No. 157). SFAS No. 157 defines fair value (replacing all prior
definitions) and creates a framework to measure fair value, but does not create any new
fair value measurements. SFAS No. 157 is effective in the first quarter of fiscal years
beginning after November 15, 2007. It will become effective for the Company on August 1,
2008. The company is evaluating how it may affect on its consolidated financial
statements.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

11

---

---



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

# FORWARD-LOOKING
STATEMENTS

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

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

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

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

# General

We develop products for the detection
of peroxide-based explosives for the homeland security market. We were incorporated under
the laws of the State of Nevada on May 22, 2002 under the name Medina International Corp.
On May 4, 2006, we changed our name to ACRO Inc. We effected this change of name by
merging our company with a wholly owned subsidiary of our company that we had formed
specifically for this purpose. We have a wholly owned subsidiary, Acrosec Ltd, which is
incorporated under the laws of the State of Israel. Our principal executive and head
office is located at 7 Jabotinsky St, Aviv Tower, Ramat Gan 52520, Israel.

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

# Plan of Operation

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

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

Based on the financial concerns as
detailed in this document, we also intend to exploit further our technology and develop
additional products as described in the Product in Development section below.

Purchase or Sale of
Equipment

Within the first nine months ending
September 30, 2006 we have purchased molds and other assembly devices which are necessary
to produce the plastic parts of our product.

12

---

---



Cash Requirements

Our cash requirement for the next 12
months is approximately $725,000, which we need to implement our plan of operation and
developing and commercializing out potential explosive detection device. We are obligated
to pay BioTech Knowledge LLC, a wholly owned limited liability company of Dr. Ehud Keinan,
$3,000 per month for consulting services to be provided by Dr. Keinan. Dr. Keinan is a
stockholder who holds 32.9% of the Companys common stock. At September 30, 2006, we
had a working capital of $450,429, which in accordance with our current monthly expenses
will satisfy our cash requirement only until June 30, 2007. There are no assurances that
we will be able to obtain sufficient cash for our continued operations. In such event that
we do not generate 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
scale down or perhaps even cease our operations.

# Financial Condition,
Liquidity and Capital Resources

During the three months ended
September 30, 2006, we incurred a loss of $404,606, compared to a net loss of $6,398 for
the comparative period in 2005. During the nine months ended September 30, 2006, we
incurred a loss of $835,168, comparable to a net loss of $63,628 for the comparative
period in 2005

During the nine months ended
September 30, 2006, we incurred $839,838 of operating expenses, comprised primarily of
$68,126 for research and development costs, $448,158 for stock-based compensation
expenses, $108,120 for legal costs, $30,000 for the audit of our December 31, 2005
financial statements and for the review of our March 31, 2006, June 30, 2006 and September
30, 2006 financial statements by our independent auditor.

During the nine months ended
September 30, 2005, we incurred $63,628 of operating expenses, comprising primarily of
$50,689 for due diligence services and $12,939 for accounting, administrative, and
consulting services.

At September 30, 2006, we had a
working capital of $450,429.

At September 30, 2006, our company
had total assets of $762,137, which consisted mainly of cash of $530,136, fixed assets of
$79,555, intangible assets of $113,507, and prepaid expenses and other current and
non-current assets of $38,939.

At September 30, 2006, our
companys total liabilities were $113,733.

We had no revenues during the nine
months ended September 30, 2006, and no significant revenues from inception through
September 30, 2006.

Going Concern

The continuation of our business is
dependent upon our raising additional financial support or on our ability to create
significant sales of our first commercial product, the ACRO-P.E.T. The issuance of
additional equity securities by us could result in a significant dilution in the equity
interests of our current stockholders. Obtaining commercial or other loans, assuming those
loans would be available, would increase our liabilities and future cash commitments.

We have historically incurred losses,
and through September 30, 2006, we have incurred losses of $1,036,000 since our inception.
Because of these historical losses, we will require additional working capital to develop
our business operations.

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

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

13

---

---



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

Product in Development

For the next 12 months we plan to
manufacture and commercialize our first product 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, small size and cost effectiveness. We
anticipate that ACRO-P.E.T may be launched in the fourth (4th) quarter of the
year 2006. However our product is in an early stage of development and its risk of failure
is high. To date, the data supporting our development programs is derived solely from
laboratory and limited early stage trials that were not all designed to be statistically
significant or proof-of-concept trial, some of which are exploratory in nature. It is
impossible to predict when or if our product will prove effective. We cannot assure you
that our development and testing of ACRO-P.E.T will be successful or that ACRO-P.E.T will
gain commercial acceptance in the marketplace.

We plan to follow ACRO-P.E.T with
additional future products utilizing our proprietary technologies and public domain
methods for detecting other explosives.

Employees

We currently have one employee, Yami
Tarsi, who serves as our Chief Executive Officer. We also hired the services of both Gadi
Aner who serves as our Chairman and Jacob Bar-Shalom, who serve as our Acting Chief
Financial Officer. We also hired a chief operating officer and an administrative staff for
the wholly owned subsidiary company.

# OFF-BALANCE SHEET
ARRANGEMENTS

We have lease agreements for the
lease of two company cars for the duration of 36 months. According to these agreements, we
have a commitment to pay a total of $1,539 per month for the duration of these lease
agreements.

# Item 3. Controls and
Procedures.

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

14

---

---



# PART II  OTHER
INFORMATION

# Item 1. Legal
Proceedings.

None.

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

None.

# Item 3. Defaults Upon
Senior Securities.

None.

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

None.

# Item 5. Other
Information.

N/A.

# Item 6. Exhibits

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

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

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

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

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

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

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

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

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

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

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

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

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

15

---

---



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

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

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

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

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

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

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

16

---

---



# SIGNATURES

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

|ACRO INC.By: /s/ Yami Tarsi
Yami Tarsi, Chief Executive Officer(Principal Executive Officer)
Date: November 9, 2006 | 
|--------------------------------------------------------------------------------------------------------------------------------- | 

|By: /s/ Jacob Bar-Shalom
Jacob Bar-Shalom, Acting Chief Financial Officer(Principal Financial Officer and Principal Accounting Officer)
Date: November 9, 2006 | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

17

---

---