Exhibit 99.3

Board of Directors Report on the State of the Company's Business

for the Period Ended September 30, 2013

1. Highlights from a description of the Company's business

The Company was incorporated in Israel on September 11, 1994 as a private company under the Companies Ordinance (New Version) – 1983 using the name “Canfite Technologies Ltd.” with the purpose of engaging in any business, investment or other transaction. On January 7, 2001, the Company changed its name to its present name.

The Company was established based on the research of Prof. Pnina Fishman, a renowned scientist, who today serves as the Company's CEO and as one of its directors. In her research, Prof. Fishman discovered one of the reasons why muscle tissue resists cancer metastases, and on the basis of such finding, the Company was formed to develop drugs which are likely to treat both cancerous illnesses and infectious illnesses, such as dry eye syndrome, psoriasis, rheumatoid arthritis and liver diseases. The Company's research and development efforts focus on the same.

On November 22, 2011, the Company announced the completion of a spinoff of the Company's operations in the ophthalmic disease field to a public company in the United States, resulting in the issuance of shares to the Company giving it control of the spinoff company. The spinoff was consummated by granting an exclusive license for the CF101 drug for use in the ophthalmic field only to a private Israeli company, which was a subsidiary of the Company, followed by the transfer of shares of the subsidiary by the Company to OphthaliX Inc. (formerly Denali Concrete Management Inc.), a United States public company whose shares were listed on the Over The Counter Markets (hereinafter: “OTCQB”) in the United States (OTCQB: OPLI) (hereinafter: "OphthaliX")¹, such that the subsidiary became a wholly owned subsidiary of OphthaliX, in consideration for the issuance of shares in OphthaliX to the Company giving the Company control of OphthaliX's share capital (approximately 82%). OphthaliX continues the development processes, clinical trials and registration of the CF 101 drug for ophthalmic diseases (hereinafter: "the Spinoff Transaction")².

The Company is a research and development company which has a number of ethical drugs under development. The Company's leading drug, CF101, is in an advanced stage of clinical development. The drug is being tested for the following diseases:

¹ On January 31, 2012, Denali Concrete Management Inc. changed its name to OphthaliX Inc., and since February 1, 2012, its symbol for trading on the OTCQB is OPLI.

² For a detailed description of the Spinoff Transaction in the ophthalmic disease field, see the Immediate Reports of the Company of November 2011 (References: 2011-01-317031; 201- 01-328428; 200- 01-334200).

³ For additional details about the trial and its results, see the Company's report of September 7, 2009 (Reference: 2009-01-224592).

⁴ For additional details, see the Company's report of June 27, 2010 (Reference number: 2010-001- 532365).

The second drug in the Company's development pipeline, CF102, is intended for the treatment of liver diseases, such as liver cancer and Hepatitis C. During the second quarter of 2008, the Phase I clinical trial for the treatment of liver cancer was successfully completed in the United States using this drug. The drug is being tested for the following diseases:

2. Exceptional events during the balance sheet period

On January 10, 2013, the required majorities at a general meeting of the Company's shareholders and meeting of the holders of warrants (Series 6) approved the extension of the exercise period of the Company's warrants (Series 6) until September 1, 2013 pursuant to the provisions of Section 350 of the Companies Law – 1999. On January 13, 2013, the Company announced the submission of an application to approve the extension under Section 350 of the Companies Law – 1999. On January 27, 2013, the Court approved this extension. For additional details, see the Company's reports of January 10, 2013 (References: 01-011130 and 2013-01-011133), January 13, 2013 (Reference: 2013-01-012312) and January 27, 2013 (Reference: 2013-01-022959).

On January 16, 2013, the Company announced, further to its report of January 3, 2012 and May 21, 2012, that after completing an analysis of the final successful results of the CF102 drug in the Phase I/II clinical trial for the treatment of liver cancer, the Company determined the optimal dosage for continuing clinical development, of the three different doses that were examined (25, 5, 1 mg), is the 25mg dose as it is the most efficacious in extending the patient's life expectancy. Determining the dosage was an essential stage in the Company's evaluation prior to beginning a Phase II trial, which is expected to start during the year. The Company filed a patent application for a patent to protect the use of the optimal dose of the CF102 drug for the treatment of liver cancer.. For additional details, see the Company's report (Reference: 2013-01-014853).

On January 21, 2012, after the Company and the Chinese company, Chemspec, successfully achieved optimization of the production process of commercial quantities of the active materials of the Company’s drugs at significantly lower costs, the Company announced the transfer of the Company's drug production facilities to China to be produced by Chemspec. The Company estimates that as a result of the production in China, it will be able to achieve millions of dollars in cost savings, shorten the production time, and benefit from future revenues from trading agreements, to the extent that any are signed, in which the Company will provide the active ingredient of the drug. Such agreements, include the existing agreements with the Company’s partners in Japan and Korea. Concurrently, the Company reported it success in such optimization. The new production process is in accordance with good manufacturing practices (GMP) and the requirements of the regulatory authorities in the United States and around the world. The Company's ability to ensure current production of the drugs will meet the Company's needs in the Phase III advanced clinical trials that it is conducting to treat psoriasis and dry eye syndrome. In addition, the new production process in China is likely to support all of the Company's future efforts in negotiating trading agreements or cooperation agreements with international pharmaceutical companies as a response to production requirements and future drug supplies.

On January 29, 2013, the Company published its expected milestones for 2013 according to which the Company intends to continue the advanced clinical trials of the Company's drugs CF101 and CF102. For additional details, see the Company's report (Reference: 2013-01-024297).

On February 3, 2013, the Company's Board of Directors (hereinafter: “the Board of Directors”) approved an insignificant grant to Green Forest Holdings Ltd., Ladenburg Thalmann & Co. Inc., and Roth Capital Partners LLC of 1,682,000 warrants (Series 10) which can be exercised to purchase 67,280 ordinary shares, par value NIS 0.25 per share, of the Company, as a commission for consulting services in connection with the Company's capital raising on February 4, 2013. The warrants (Series 10) can be exercised from immediately after their grant until October 31, 2015. The warrants (Series 10) were issued subject to a shelf prospectus that the Company published on the Tel Aviv Stock Exchange on July 27, 2012. On March 14, 2013, the approval to list the warrants (Series 10) of the Tel Aviv Stock Exchange Ltd. was received. For additional details, see the Company's report of February 21, 2013 (Reference: 2013-01-044550).

On February 4, 2013, the Company offered securities to the public based on a shelf offer report (Reference: 2013-01-02-8827) which was published based on a shelf prospectus that the Company published on July 27, 2012. The securities offered to the public included 6,927 units (hereinafter in this paragraph: "the Units") by way of a tender offer of the price of the Units with a minimum price of NIS 3,144 per Unit. Every Unit comprises 10,000 ordinary shares, par value NIS 0.25 per share, of the Company at NIS 0.3144 per share, 5,000 warrants (Series 10) and 5,000 warrants (Series 11), before the consolidation of the Company's authorized capital and issued and paid-up capital at a ratio of 1:25⁵. The warrants included in the Units were issued at no cost. Each 25 warrants (Series 10 and Series 11) can be exercised to purchase one ordinary share, par value NIS 0.25 per share, at an exercise price per ordinary share of NIS 0.394 and NIS 0.392, respectively. There was an over subscription of the offering and accordingly, there was an additional allotment of 550 Units and as a result, a total 7,477 Units were purchased by the public. The total net proceeds from this offering were NIS 26,498 thousand (after deducting issuance expenses of NIS 1,655 thousand). The proceeds from the offering were received on February 5, 2013.

⁵ For additional details, see the Company's reports (References: 2013-01-043510 and 2013-01-055138).

On March 3, 2013, the Company announced that on February 28, 2013, the then-current CEO of OphthaliX resigned and Mr. Barak Singer was appointed as the CEO of OphthaliX. Mr. Singer concurrently serves as the VP Business Development of the Company. The Company and OphthaliX divides the payment of Mr. Singer's salary equally. In addition, on February 28, 2013, OphthaliX announced that it agreed with the Company to postpone receipt of the repayments to which the Company is entitled according to a certain services agreement between them, which was signed on November 22, 2011, pursuant to which the Company provides services with respect to OphthaliX’s clinical trials in the ophthalmic field. Such payments are postponed, subject to certain conditions, until OphthaliX completes a capital raise. The repayment to the Company may not exceed the balance of cash held by OphthaliX after repayment of all of its liabilities to other third parties at such time.

On March 17, 2013, the Company announced that on March 15, 2013, OphthaliX completed enrollment of 236 patients for the Phase III study of CF101 for the treatment of dry eye syndrome. In such Phase III study, which is being carried out in a number of medical centers in Israel, Europe and the United States, two doses of the CF101 drug are being examined against a placebo for a period of 24 weeks. OphthaliX is expected to publish the results of the trial in the fourth quarter of this year.

On March 21, 2013, the Company announced the convening of an annual general meeting, which included in its agenda: Reappointment of Kost Forrer Gabbay & Kasierer as the Company's auditors for 2013 and authorizing the Company's Board of Directors to determine the auditors’ fees; the reappointment of Pnina Fishman Ilan Cohen, Avraham Sartani, Liora Lev and Guy Regev as directors of the Company until the next annual general meeting of the Company; the authorization of the Company's CEO Pnina Fishman to serve as the Chairman of the Company's Board of Directors (hereinafter: "the dual positions") for a period not to exceed six years from the date of the approval of the general meeting, according to the provisions of Section 121(c) of the Companies Law; the approval of a private placement of 250,000 unlisted options to a director of the Company, which can be exercised to purchase 10,000 ordinary shares, par value NIS 0.25 per share, of the Company; the approval of an increase in the Company's authorized capital by NIS 500,000,000 such that the authorized capital of the Company would be NIS 10,000,000 divided into 1,000,000 ordinary shares, par value NIS 0.01 per share; the approval of a consolidation of the Company's authorized capital and issued and paid-up capital at a ratio of 1:25 (hereinafter: "the Consolidation"), in such a way that every 25 ordinary shares, par value NIS 0.01 per share, would be consolidated into one ordinary share, par value NIS 0.25 per share, of the Company; the amendment of the Company's Articles of Association according to the increase of the Company's capital and the Consolidation (Reference: 2013-01-015697). For additional details, see the amended report (Reference: 2013-01-050008) and the clarifying report of April 30, 2013 (Reference: 2013-01-050008). On May 2, 2013, the general meeting decided to remove from the agenda the subject of the dual positions and approved all the other subjects on the agenda.

On March 21, 2013, the Company announced the approval by the Board of Directors of a private placement of 740,000 unlisted options which can be exercised to purchase 29,600 ordinary shares, par value NIS 0.25 per share, of the Company to five employees, of whom three are executive officers, and to three consultants of the Company. The exercise price of each option is NIS 0.326. These options can be exercised for a period of 48 months from the date of their grant, so that in every quarter 1/16 of the options granted to each offeree will become exercisable. The options expire 10 years from the date of the grant. For additional details, see the Company's report (Reference: 203-01-015583). This grant is subject to the Tel Aviv Stock Exchange’s approval for listing of the ordinary shares issuable upon the exercise of these options.

On March 24, 2013, the Company announced the submission of an application under Section 350 of the Companies Law – 1999 requesting the District Court in Lod, Israel to issue an order instructing the convening of a meeting of shareholders and a meeting of warrant holders (Series 8) of the Company to approve the extension of the exercise period of the warrants (Series 8), which were issued under a prospectus dated July 27, 2010, until December 31, 2013 (hereinafter in this paragraph: "the Application”). The Application was submitted to the District Court in Lod (Reference: 2013-01-018253) and according to its decision, the Application was submitted for the response of the Securities Authority and the Official Receiver. On April 9, 2013, after receiving the response of the Securities Authority and the Official Receiver, the District Court in Lod approved: (1) providing interim relief according to which the exercise period of the warrants (Series 8) was extended until September 30, 2013; and (2) the convening of a meeting of shareholders and a meeting of the holders of warrants (Series 8) to approve the extension until December 31, 2013. On April 10, 2013, the Company announced the convening of a general meeting of shareholders and a meeting of warrant holders (Series 8) on April 30, 2013 (Reference: 2013-01-031669). Due to negotiations with the Company's shareholders, the meetings were postponed to June 11, 2013. On June 4, 2013, the Company issued a notice proposing to convene a meeting to change, in addition to the exercise period, the exercise price from NIS 0.55 to NIS 0.75 per ordinary share. On June 11, 2013, the meeting of shareholders and of warrant holders (Series 8) of the Company fully approved the extension and the change in exercise price, and on June 24, 2013, the District Court in Lod issued its approval of this arrangement.

On April 17, 2013, the Company announced that on April 15, 2013 it confidentially submitted to the U.S. Securities and Exchange Commission (hereinafter: “the SEC”) a draft registration statement on Form 20-F to register the Company’s American Depositary Receipts (hereinafter: “ADRs”) and to pursue the listing the Company's ADRs for trading on a U.S. national securities exchange (i.e,. the NASDAQ Capital Market or NYSE MKT). On September 12, 2013, the SEC declared the Form 20-F registration statement effective, thereby initiating the Company’s Level II ADR Program. On November 17, 2013, the Company announced that the Level II ADR Program was approved for on the NYSE MKT stock exchange. The trading commenced on November 19, 2013 under the symbol "CANF".

On May 20, 2013, one of the consultants of the Company announced that he waived the rights to 80,000 unlisted options which were granted to him.

On May 12, 2013, the Company announced that the independent research of a group of leading researchers headed by Prof. Francesca Cordiro of the Imperial College London and University College London, was presented at the conference of The Association for Research in Vision and Ophthalmology (ARVO) in Seattle, Washington, United States,. Such research determined that the technological platform of OphthaliX for treating glaucoma is efficacious and protects the optical nerve by preventing destruction of the nerve cells. Such research also proved that the regulation of the A3 adenosine receptor, which is OphthaliX's technological platform, results in a reduction in intraocular pressure and assists in the treatment of glaucoma (Reference: 2013-01-059347).

On May 23, 2013, the Company announced that the Company's CEO, Prof. Pnina Fishman, was chosen to present the Company and its product candidates at the American Annual Capital Market Conference of Marcum LLP MicroCap in New York City, New York, United States. The Company presented to more than 1,000 people, including senior representatives of U.S. investment firms which specialize in investments in leading small cap companies whose assets value less than $500 million. At the conference, the Company held a number of meetings with investment managers of leading investment funds, including funds specializing in the biotechnology field. The conference was expected to include senior management of more than 100 public companies, U.S. institutional investment firms and bankers. The Company viewed its participation in the conference and the Company's presentation thereat as an important opportunity to promote the awareness of its operations and the Company's achievements in the U.S. capital markets.

At its meeting on May 30, 2013, the Company's Board of Directors appointed Ilan Cohn as the Chairman of the Company's Board of Directors.

On June 19, 2013, the Company announced the submission of an application under Section 350 of the Companies Law – 1999 requesting the District Court in Lod, Israel to issue an order instructing the convening of a meeting of shareholders and a meeting of holders of warrants (Series 10 and Series 11) of the Company, which were issued under a prospectus dated July 27, 2012, in order to cancel the linkage of the exercise price of the warrants (Series 10 and Series 11) to the Israeli consumer price index (published on January 15, 2013 for December 2012) so that the exercise price for one warrant (Series 10) will equal NIS 0.394 per ordinary share, unlinked, and the exercise price for one warrant (Series 11) will be equal NIS 0.392 per ordinary share, unlinked (hereinafter in this paragraph: "the Application"). The Application was submitted to the District Court in Lod, Israel (Reference: 2013-01-068706) and according to its decision, the Application was sent for the response of the Securities Authority and the Official Receiver. On July 11, 2013, after receiving the response of the Securities Authority and the Official Receiver, the District Court in Lod, Israel approved the convening of a meeting of shareholders and a meeting of the holders of warrants (Series 10 and Series 11) to approve the cancellation of such linkage. On July 11, 2013, the Company announced the convening of a general meeting of shareholders and meetings of the holders of warrants (Series 10 and Series 11) on August 1, 2013 (Reference: 2013-01-091083). On July 21, 2013, the Company published a clarification report relating to revisions of the terms of the warrants (Series 10 and Series 11) (Reference: 2013-01-099177). On August 1 and August 4, 2013, the general meeting of shareholders and holders of the warrants (Series 10 and Series 11) of the Company, respectively, approved the cancellation of the linkage and on August 20, 2013, the Court approved this same (Reference: 2013-01-122469).

On June 23, 2013, 6,000 warrants (Series 8) were exercised to purchase 240 ordinary shares of the Company, par value NIS 0.25 per share, in consideration for NIS 3.6 thousand.

On July 1, 2013, the board of directors of OphthlaliX approved the grant of 235,000 options to certain of its directors.

On July 2, 2013, the Company announced that the U.S. Patent and Trademark Office issued a patent for the use of CF602 drug for the treatment of sexual dysfunction. This announcement follows the report of November 12, 2012 regarding the submission of a patent application in the United Stated with respect to the use of the Company's drugs to treat sexual dysfunction and the intention to develop the CF602 drug for such indications. The issuance of this patent strengthens the Company's intellectual property and enables it to continue to develop the CF602 drug for conditions of sexual dysfunction and to enter into a field with a market size estimated by the Company and various research reports at $3 billion dollars as of 2010⁶. For additional details, see (Reference: 2013-01-080586).

⁶ GlobalData – Erectile Dysfunction Therapeutics – Pipeline Assessment and Market Forecasts to 2018.

On July 3, 2013, the Company announced that OphthaliX, which is traded in the United States on the OTCBB, filed a registration statement on Form S-1 with respect to a possible public common stock offering in the United States, and that Maxim Group LLC is the lead underwriter of the offering and Roth Capital Partners LLC will provide consulting services with respect to the same. In addition, OphthaliX published that it intends to pursue applying for the listing of its commons stock on the NYSE MKT (Reference: 2013-01-082278).

On July 17, 2013, the Company announced that OphthaliX submitted a study protocol for a Phase II trial of CF101 for the treatment of uveitis, an eye disease which causes blindness. The trial, which will be conducted in medical centers in Europe and Israel, will examine the safety and efficacy of the CF101 drug. 45 patients will participate in the trial and will receive either the CF101 drug or a placebo for a period of six months (Reference: 2013-01-094452).

In connection with the August 1 and August 4, 2013 shareholder and warrant (Series 10 and Series 11) holder approvals of the cancellation of the linkage of the exercise price of the warrants (Series 10 and Series 11) to the Israeli consumer price index, an application for an arrangement was filed with the District Court in Lod, Israel requesting approval of a change in the accounting treatment of the warrants (Series 10 and Series 11), such that the Company will increase its shareholders' equity in order to meet the threshold conditions of a U.S. national securities exchange (see Note 4(g) to the financial statements). On August 20, 2013, after submitting such application on August 5, 2013, the District Court in Lod, Israel approved the change in accounting treatment, as well as the cancellation of the linkage of the exercise price of the warrants (Series 10 and Series 11) to the Israeli consumer price index.

On August 12, 2013, the Company announced that it completed the enrollment of all the trial patients in the Phase IIb trial of the CF101 drug as a single drug for the treatment of rheumatoid arthritis. The results of the Phase IIb trial is expected to be received during the fourth quarter of 2013 (Reference: 2013-01-114597).

On August 18, 2013, the Company filed an application with the District Court in Lod, Israel to allow the Company to convene a general meeting of shareholders of the Company and a general meeting of holders of warrants (Series 6) of the Company in order to extend the exercise period of the warrants (Series 6) until September 1, 2014 (Reference: 2013-01-119670). The Court was requested to issue temporary relief according to which the exercise period would be extended to October 13, 2013. On August 26, 2013, the Court approved the application and resolved that, until approval of the extension until September 1, 2014, the exercise period of the warrants (Series 6) of the Company would be extended until October 30, 2013.

On August 27, 2013, the Company announced that on the basis of the success of the Phase I/II clinical trial of the CF102 drug for the treatment of liver cancer, and because one of the patients in the trial, who suffered from advanced liver cancer, reached a life expectancy of four years, the Company decided to extend its upcoming Phase II trial to 130 advanced stage liver cancer patients and intends to submit the protocol for the same to the FDA for its approval. The Company estimates that it will start begin the Phase II trial with advanced stage liver cancer patients, subject to the required regulatory approvals. For additional details, see the Company's report (Reference: 2013-01-0127170).

On August 27, 2013, a general meeting of the Company's shareholders and a meeting of the holders of its warrants (Series 6) were called for September 30, 2013 in order to approve the extension of the exercise period of the warrants (Series 6) until September 1, 2014. The meetings were subsequently postponed until October 14, 2013.

On September 8, 2013, the Company announced that OphthaliX, which is engaged in the development and commercialization of drugs for ophthalmic diseases, announced the receipt of a patent issued by the European Patent Office for the treatment of dry eye syndrome, including Sjögren's Syndrome. Approval of the patent, titled "Agonist Receptor for Adenosine of the A3 type for treating the Dry Eye Syndrome which includes the Sjögren Syndrome”, was based on positive findings obtained in clinical trials that the Company and OphthaliX conducted up to the date of the report. The patent, which was transferred to OphthaliX by the Company as part of the Spinoff Transaction, gives OphthaliX exclusive rights to use the CF101 drug in Europe for the Sjögren’s Syndrome until 2025. For additional details, see the Company's report (Ref.: 2013-01-137751).

On September 12, 2013, the SEC declared the Company’s previously filed Form 20-F registration statement effective, thereby initiating the Company’s Level II ADR Program. The ADRs continued to trade on the OTCBB under the symbol "CANFY". Each ADR represents two ordinary shares of the Company. For additional details, see the Company's report (Ref.: 2013-01-143784).

During the period of this report, 8,670,974 unlisted options were exercised to purchase 346,831 ordinary shares, par value NIS 0.25 per share, of the Company. The proceeds from the exercise of these options was equal to NIS 86,556 thousand.

During the period of this report, 2,000,000 unlisted options of the Company expired.

3. Financial position, liquidity and sources of financing

The balances of cash and cash equivalents in the balance sheet at September 30, 2013 aggregated NIS 9,673 thousand as compared to NIS 4,278 thousand at December 31, 2012. The increase in cash during the period is due to proceeds from the Company’s capital raising transactions during the period ended September 30, 2013, which exceeded the payments made by the Company to finance its operations.

The balance of receivables at September 30, 2013 aggregated NIS 1,615 thousand as compared to NIS 1,672 thousand at December 31, 2012. The change in the balance is negligible.

Balances of net fixed assets at September 30, 2013 aggregated NIS 157 thousand compared to NIS 159 thousand at December 31, 2012. The increase in fixed assets is due to new asset acquisitions which exceeded current depreciation expenses.

The consolidated balance sheet at September 30, 2013 aggregated NIS 11,445 thousand as compared to NIS 6,109 thousand at December 31, 2012. The increase is primarily due to the increase in cash as a result of the Company’s capital raising transactions during the first quarter of 2013.

Balances of trade payables at September 30, 2013 aggregated NIS 2,046 thousand as compared to NIS 2,821 thousand at December 31, 2012. The decrease in trade payable balances is due to payments that the Company made after raising capital in February 2013.

The balance of other payables in the balance sheet at September 30, 2013 aggregated NIS 2,502 thousand as compared to NIS 4,586 thousand at December 31, 2012. This decrease is primarily due to the decrease in the reserve for trade payables and the payment of such payables that the Company made after raising capital in February 2013.

The balance of warrants (Series 6) is NIS 149 thousand, which are presented at the balance sheet value on September 30, 2013. The balance of the warrants (Series 7) is NIS 159 thousand, which are presented at the balance sheet value on September 30, 2013. The balance of warrants (Series 8) is NIS 308 thousand, which are presented at the stock exchange value on September 30, 2013. The warrants (series 6) expired on October 30, 2013 and the expiration date of the warrants (Series 7 and Series 8) is less than a year from the date of the report.

The balance of net long-term liabilities at September 30, 2013 aggregated NIS 67 thousand, of which NIS 6,281 thousand is for a liability due to employee benefits. At December 31, 2012, the balance was NIS 68 thousand for the liability for employee benefits. The change in the balance is negligible.

Total capital in the consolidated balance sheet at September 30, 2013 aggregated NIS 6,214 thousand as compared to a capital deficit of NIS 2,645 thousand in the consolidated balance sheet at December 31, 2012. The increase in capital during the period is primarily due to raising capital during this period, which exceeded the Company’s current loss, and the balance of exercisable warrants (Series 10 and Series 11) of NIS 3,178 thousand and NIS 3,066 thousand, respectively, changing classifications from liabilities to equity instruments as a result of the cancellation of the linkage of their exercise price to the Israeli consumer price index.

4. Results of business operations

The loss during the nine-month period ended September 30 2013 aggregated NIS 19,580 thousand as compared to NIS 15,184 thousand during the comparable prior year period and NIS 21,887 thousand for the year ended December 31, 2012. The increase in the loss compared to the comparable prior year period is due to an increase in general and administrative expenses, an increase in research and development expenses and an increase in financing expenses.

Research and development expenses during the nine-month period ended September 30, 2013 aggregated NIS 10,185 thousand as compared to NIS 9,273 thousand during the comparable prior year period and NIS 13,160 thousand for the year ended December 31, 2012. The increase in research and development expenses compared to the comparable prior year period is primarily due to the increase in clinical trial expenses and to royalties payable by the Company.

General and administrative expenses during the nine-month period ended September 30, 2013 aggregated NIS 9,605 thousand as compared to NIS 6,089 thousand during the comparable prior year period and NIS 9,230 thousand for the year ended December 31, 2012. The increase in the expenses compared to the comparable prior year period is primarily due to an increase in share based payments, salaries and professional services.

Financing expenses for the nine-month period ended September 30, 2013 aggregated NIS 374 thousand as compared to NIS 279 thousand in the comparable prior year period and NIS 27 thousand for the year ended December 31, 2012. The increase is primarily due to revising the fair value of the exercisable warrants, including the increase in the value of the warrants (Series 10 and Series 11) between the date of their grant in February 2013 until the date of canceling the linkage of their exercise price to the Israeli consumer price on August 20, 2013, and foreign exchange rate differentials on deposits.

Financing revenues for the nine-month period ended September 30, 2013 aggregated NIS 584 thousand as compared to NIS 457 thousand during the comparable prior year period and NIS 541 thousand for the year ended December 31, 2012. The increase of financing revenues in the first nine months of 2013 was primarily due to interest on deposits and an issuance to a third party of the Company’s treasury stock, as well as a decrease in the fair value of the exercisable warrants (Series 7,8), and foreign exchange rate differentials on supplier balances during the comparable prior year period.

There were no taxes on income for the nine-month period ended September 30, 2013 or during the comparable prior year period as compared to NIS 11 thousand for the year ended December 31, 2012. The taxes during 2012 were a result of the advances paid on account of surplus expenses to the tax authorities in Israel. The Company does not expect to utilize this deduction in the foreseeable future due to its large losses. As such, these advances were recorded as tax expenses.

Net cash used for operating activities during the nine-month period ended September 30, 2013 aggregated NIS 20,775 thousand as compared to NIS 13,064 thousand during the comparable prior year period and NIS 16,244 thousand for the year ended December 31, 2012. The increase is primarily due to a decrease in trade payables and other payables.

Net cash used for investing activities during the nine-month period ended September 30, 2013 aggregated NIS 35 thousand as compared to net cash provided by investing activities of NIS 69 thousand in the comparable prior year period and net cash provided by investing activities of NIS 75 thousand for the period ended December 31, 2012.

The Company had net cash from financing activities of NIS 25,844 thousand during the nine-month period ended September 30, 2013 as compared to NIS 5,601 thousand during the comparable prior year period and NIS 5,601 thousand for the year ended December 31, 2012. The increase is due to the Company’s capital raising transactions in February 2013. In the comparable prior year period, the Company raised NIS 5,563 thousand during the second quarter.

5. Disclosure regarding the Company's internal auditor

There is no significant change from the information about the Company’s internal auditor as presented in the report for the year ended December 31, 2012, except for the following:

At the meeting of the Company's Audit Committee (hereinafter: “the Audit Committee”) on May 26, 2013, the internal audit report of the Company's internal auditor regarding the Company’s disaster recovery plan, which had been submitted to the Audit Committee on May 23, 2013, was approved.

6. Procedure for approving the financial statements

The Company's Board of Directors appointed the Audit Committee to examine the financial statements whose functions and composition are as follows:

The Audit Committee and its members:

This Audit Committee has the following three directors as members:

The members of the Audit Committee were appointed after examining their eligibility and the delivery of declarations in accordance with the provisions of Clause 3 of the Companies Regulations (Directives and conditions regarding the process of approving the financial statements) – 2010.

The process of approving the financial statements:

7. Directors with accounting and financial expertise

According to a decision of the Company's Board of Directors of September 21, 2005, the minimum number of directors with accounting and financial expertise is one. The Company's Board of Directors based this decision on the level of the Company's operations, the nature of its operations as a research and development intensive company and the absence of any particular complexity in its operations.

The following is a list of directors of the Company who have accounting and financial expertise.

8. Disclosure regarding critical accounting estimates

In the opinion of the Company's management, no critical accounting estimates were used in the financial statements for the period covered by this report.

9. Linkage basis report

10. Sensitivity analysis table

The sensitivity to changes in the New Israeli Shekel and the U.S. dollar rates is not significant.

As the significant portion of the Company's expenses is in U.S. dollars, the Company attempts to reduce its foreign currency risk by maintaining some of its liquid assets in U.S. dollars or currencies linked to the U.S. dollar. As a result to its economic exposure, which does not contradict the accounting exposure, the Company holds part of its current assets in balances in foreign currencies.

11. Exceptional events after the balance sheet date

On October 3, 2013, the Company announced that Dr. Sari Fishman, who is responsible for the clinical research activities of OphthaliX (OTCQB: OPLI) on behalf of the Company, in which the Company holds 82% of its shares, was chosen to represent OphthaliX in a European forum for future drugs in the ophthalmology field (Ophthalmology Futures European ForumTM) which took place in Amsterdam, Holland. The lecture included information on OphthaliX's development plan in the field of treating glaucoma, which is in Phase II clinical trials in the United States, Europe and Israel. (Ref.: 2013-01-155685).

On October 14, 2013, the general meeting of warrant holders (Series 6) approved the extension of the exercise date of the warrants (Series 6) until September 1, 2014, but because the majority vote required to approve such extension at the meeting of the Company's shareholders was not obtained, the extension was not approved and the warrants (Series 6) expired on October 30, 2013 (Refs.:2013-01-165534, 2013-01-165537 and 2013-01-165795).

On October 15, 2013, the Company announced that the CF101 drug was chosen as one of the ten most attractive opportunities in the field of "Top Autoimmune/Anti-Inflammatory Disease Projects to Watch" by Elsevier Business Intelligence, the world leader in the field of information on the medical industry (Ref.: 2013-01-166233).

On October 22, 2013, the Company announced the milestones that are expected with respect to receiving and publishing the results of the Company's clinical trials by the end of 2013 and the steps taken to complete the Company's application for listing its ADRs on the NYSE MKT prior to the publication of the Phase III clinical trial results for the treatment of dry eye syndrome and the Phase IIb clinical trial results for the treatment of rheumatoid arthritis. The Company estimates that it will receive and publish such results during the last two weeks of December 2013 (Ref.: 2013-01-172173).

On October 22, 2013, the Company published an amendment to the Company's shelf prospectus of July 27, 2012. (Ref.: 2013-01-172320).

On October 23, 2013, the Company offered securities to the public under a shelf offer report (Ref.: 2013-01-173001) published under the shelf prospectus that the Company published on July 27, 2012. The securities were offered to the public in 3,600 units (hereinafter in this paragraph: "the Units") through a tender offer of the Unit price with a minimum price of NIS 5,000 per Unit. Each Unit comprises 500 ordinary shares, par value NIS 0.25 per share, at a price of NIS 10 per share, and 375 warrants (Series 12) at no cost. The offering was oversubscribed and accordingly, an additional 75 Units were offered. In total, 3,675 Units were purchased by the public. The total net consideration from the offering was NIS 21,315 thousand (after deducting issuance expenses of NIS 939 thousand). The proceeds from the offering were received on October 23, 2013.

On October 22, 2013, the Company's Board of Directors approved a non-significant private placement to Roth Capital Partners LLC and to Mesodi Consulation & Investments Ltd. of 91,875 warrants (Series 12) which can be exercised to purchase 91,875 ordinary shares, par value NIS 0.25 per share, of the Company, as commissions for consulting services in connection with the Company's public offering on October 23, 2013. The warrants (Series 12) can be exercised from immediately after the grant until October 22, 2016. The warrants (Series 12) were issued subject to a shelf prospectus that the Company published with the Tel Aviv Stock Exchange on July 27, 2012. On November 10, 2013, the Tel Aviv Stock Exchange approved the listing of the warrants (Series 12). For additional details, see the Company's report of October 28, 2013 (Ref.: 2013-01-176454).

On November 4, 2013, the Company announced that its Board of Directors approved a private placement of 34,536 ordinary shares, par value NIS 0.25 per share, to IRTH. For additional details, see the Company's report (Ref.: 2013-01-182778). On November 12, 2013, after receiving the approval of the Tel Aviv Stock Exchange to list these shares for trading, the Company issued the 34,536 ordinary shares.

On November 4, 2013, the Company announced that, prior to the publication of the final results in two of the advanced clinical trials that it is conducting, the Company recently signed ten confidentiality agreements with established pharmaceutical and biotechnology companies with respect to potential negotiations for the commercialization of CF101 for the treatment of autoimmune inflammatory indications (Ref.: 2013-01-172173).

On November 6, 2013, the Company announced that the U.S. Patents and Trademark Office granted a patent No. 8,557,790 titled "A3 Adenosine receptor agonists for the reduction of intraocular pressure". Intraocular pressure is a significant risk factor in the development of glaucoma. The patent granted to the Company relates to the use of the CF101 drug, is part of the intellectual property of the Company for which OphthaliX has an exclusive license to develop CF 101 for the reduction intraocular pressure (according to an agreement between the companies which gives OphthaliX, through its subsidiary, exclusive rights to CF 101 in the field of ophthalmic indications) and will provide patent protection in the United States until 2030 (Ref.: 2013-01-183993).

On November 7, 2013, the Company announced the filing of an application under Section 350 of the Companies Law – 1999 with the District Court in Lod, Israel (Ref.: 2013-01-186279) requesting it to order the convening of a meeting of shareholders and a meeting of the holders of warrants (Series 7), which were issued under a prospectus of May 27, 2010, in order to approve the extension of the exercise period of the warrants (Series 7) until March 31, 2014. The court was also requested to issue temporary relief according to which the exercise period will be extended until November 30, 2013. On November 10, 2013, the District Court in Lod, Israel approved the application and gave temporary relief ex parte by extending the exercise period of the warrants (Series 7) until the earlier of November 30, 2013 and when the Securities Authority responds to the application for temporary relief (Ref.: 2013-01-187113).

On November 17, 2013, the Company announced that the Level II ADR Program was approved for on the NYSE MKT stock exchange. The trading commenced on November 19, 2013 under the symbol "CANF". Up until such date, the Company's ADRs continued to trade on the OTCBB under the symbol “CANFY”. For additional details, see the Company's report (Ref.: 2013-01-192507).

On November 19, 2013, the District Court in Lod, Israel issued additional interim relief extending the exercise period of the warrants (Series 7) until January 31, 2014 (Ref.: 2013-01-196107).

On November 20, 2013, the District Court in Lod, Israel approved the Company's request to convene a general meeting of the Company's shareholders and a meeting of the holders of its warrants (Series 7) in order to approve the extension of the exercise period of the warrants (Series 7) until March 31, 2014 (Ref.: 2013-01-197793).

On November 21, 2013, the Company announced the convening of a general meeting of shareholders and a meeting of warrant holders (Series 7) on December 15, 2013 (References: 2013-01-199536 and 2013-01-199542).

During the period after the balance sheet date, 73,601 unlisted options were exercised to purchase 2,944 ordinary shares, par value NIS 0.25 per share, of the Company. The proceeds from exercising the options were NIS 26 thousand.

On November 28^th 2013, the Company’s Board of Directors approved the Company’s compensation policy in accordance to the provisions of Amendment 20 to the Israeli Companies Law and based on the recommendation of the Company’s compensation committee. Also on November 28^th 2013, as a result of the listing of the Company’s Level II American Depositary Receipts on the NYSE MKT and as permitted under Israeli law, the Company’s Board of Directors approved a change in the Company’s reporting requirements under Israeli law from the public reporting required under Chapter E to the Israeli Securities Law, 1968 to the public reporting required under the Securities and Exchange Act of 1934, as amended. Meetings of the holders of the Company’s warrants (series 7 through series 12) and a special shareholders’ meeting to approve the foregoing will be held on December 16, 2013 and January 6^th 2014, respectively.

Administrative Enforcement

On November 28^th 2013, the Company's Board of Directors resolved to approve the adoption of an internal plan for the administrative enforcement (the “Administrative Enforcement Plan”). The Administrative Enforcement Plan has prepared in order to make sure and supervise that the Company is acting according to the provision of the law. The Company's Board of Directors resolution was resolved after that the Audit Committee has discussed in its meeting dated May 26^th 2013 of the Administrative Enforcement Plan.

Date: November 28, 2013

APPENDIX A

Quarterly report regarding the effectiveness of the internal control over financial reporting and disclosure pursuant to Regulation 38c(a):

The management, supervised by the Board of Directors of CanFite BioPharma Ltd. (hereinafter: "the Company"), is responsible for determining and maintaining suitable internal control over financial reporting and disclosure within the Company.

In this matter the members of the management are:

Internal control over financial reporting and disclosure includes controls and procedures existing within the Company, which were implemented by the CEO and the most senior officer in the Company with financial responsibilities or under the supervision of each such person, or by anyone who actually performs these functions, under the supervision of the Company's Board of Directors. These controls and procedures are intended to provide reasonable certainty about the reliability of the financial reporting and the preparation of the statements in accordance with applicable law, and to ensure that the information that the Company is required to disclose in its financial statements is published in accordance with the provisions of the applicable law, and is collected, processed, summarized and reported at the time and in the form set forth under applicable law.

Internal control includes, inter alia, controls and procedures planned to ensure that the information that the Company is required to disclose is collected and sent to the Company's management, including the CEO and the most senior officer with financial responsibilities, or anyone who actually performs these functions, so that management can make necessary and appropriate decisions in a timely manner with respect to the Company’s disclosure requirements.

Due to its structural limitations, internal control on financial reporting and disclosure is not intended to provide absolute certainty that a misleading statement or the ommission of information in the disclosure will be prevented or disclosed.

In the quarterly report regarding the effectiveness of internal control over financial reporting and disclosure, which is attached to the quarterly report for the period ended June 30, 2013 (hereinafter: "the last quarterly report on the matter of internal control"), the Company determined that its internal control is effective.

During the period covered by the report, nothing was brought to the attention of the Company’s Board of Directors or management of any event or matter which changes the evaluation of the effectiveness of the Company’s internal control, as presented in the last quarterly report on the matter of internal control.

As of the date of the report, based on the last quarterly report on the matter of internal control and on information brought to the attention of the Company's management and Board of Directors, as mentioned above, the Company determined that its internal control is effective.

Declaration of the CEO pursuant to Regulation 38(c)(d)(1)

CEO's Declaration

I, Pnina Fishman, declare that:

The foregoing does not derogate from my responsibility or the responsibility of any other person in accordance with any law.

Declaration of the CFO pursuant to Regulation 38(c)(d)(1)

CFO's Declaration

I, Motti Farbstein, declare that:

The foregoing does not derogate from my responsibility or the responsibility of any other person in accordance with any law.