OTC: SFRX

The
Company is also actively researching, exploring and testing new technology to help more accurately understand current and future historic
shipwreck sites in an unobtrusive manner. Up to the date of this filing, all tests of new and unproven technology and methods have failed
with the exception of the Company’s proprietary SeaSearcher device which discriminates between different metals, including gold
and silver. Additional scientists have been hired as consultants to assist in these endeavors. The development of the SeaSearcher has
had numerous technical challenges based on the unique environmental and physical attributes of the Juno Beach area. The ongoing cost
of SeaSearcher development is substantial and is an additional and significant financial hurdle for the Company. Seafarer believes the
advancement of this technology is important for the advancement of the field of archaeology.

The
Company is actively reviewing potential historic shipwreck sites for possible exploration and recovery. Should the Company decide that
it will pursue exploration and recovery activities at other potential shipwreck sites it may be necessary to obtain permits as well as
environmental permits. Some potential shipwreck sites are outside of State waters which will be very advantageous to Seafarer since state
permitting agencies will not be able to continuously hamper or slow Seafarer’s operations, as demonstrated in the past.

There
are a number of other significant challenges and risks regarding this type of business venture that make it a perilous business venture
with the potential that the Company could fail. If the Company were to cease its operations, it is likely that there would be complete
loss of all capital invested in and/or borrowed by the Company to date.

Limited
Revenue and Significant Operating Losses

The
Company expects to continue to incur significant operating losses and to generate negative cash flows from operating activities while
developing the necessary infrastructure and technology for the exploration of historic shipwreck sites.

The
Company’s ability to eliminate operating losses and to generate positive cash flow from operations in the future will depend upon
a variety of factors, many of which it is unable to control. Based on our historical rate of expenditures the Company expects to expend
its available cash in less than one month from the filing date of this report. If the Company is unable to implement its business plan
successfully, it may not be able to eliminate operating losses, generate positive cash flow, or achieve or sustain profitability, which
would materially and adversely affect its business, operations, and financial results, as well as its ability to make payments on its
debt obligations, and the Company may be forced to cease its operations. If the Company is not able to continue to raise capital, then
it will be forced to cease its operations, which would likely result in both the complete loss of all capital invested in and loans provided
to the Company.

The
Company’s Auditor has Substantial Doubts as to the Company’s Ability to Continue as a Going Concern.

The
Company has not generated any meaningful revenue since inception. Our future is dependent upon our ability to obtain financing to continue
our exploration activities. We will seek additional funds through private placements of our common stock. For the past several years
the Company’s auditors have issued an opinion that substantial doubt exists as to whether the Company can continue as a going concern,
making it more challenging for the Company to obtain financing from investors. If the Company becomes unable to obtain financing, then
it is very likely that it will be forced to cease operations and all capital invested in or loaned to the Company will be lost. Our consolidated
financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts
of and classification of liabilities that might be necessary in the event we cannot continue in existence.

Companies
such as Seafarer that do not generate significant cash flow to cover expenses must rely on outside financing, which carries a very high
degree of risk due to the fact that it may become extremely challenging or impossible to obtain such outside financing. We cannot guarantee
we will be successful in generating revenue in the future or be successful in raising funds through the sale of shares to pay for the
Company’s business plan and expenditures. During the years ended December 31, 2025 and 2024, we did not generate any significant
revenues from continuing operations. Failure to generate revenue or to raise funds could cause us to go out of business, which would
result in the complete loss of all investors’ capital in the Company.

4

General

It
has been estimated by the United Nations Educational, Scientific and Cultural Organization (“UNESCO”) that there are over
three million undiscovered shipwrecks around the world and some of these shipwrecks were lost with verifiable cargoes that contained
valuable materials, including artifacts and treasure. However, many of these shipwrecks may have very little archaeological or historical
value, and furthermore, a high percentage of these shipwrecks would not have been carrying valuable cargo including artifacts or treasure.

The
Company’s principal business plan is to develop the infrastructure and technology to engage in the rescue archaeology-sensitive
exploration, recovery and conservation of historic shipwrecks and develop new technologies to vastly improve archaeology. Once artifacts
have been properly conserved, they will be made available for scientific research and allowed to be displayed for the public.

The
Company believes it may eventually be conducting archaeological research and rescue archaeology around the world and potentially supporting
governmental or quasi-governmental organizations, universities and affiliated research groups and private research entities in the documentation
and survey of historic shipwrecks based on their discretion. The business plan also includes in-depth archival research and translation
of historical documents from various international archives and repositories. These translations of archival research will be made available
to the country of origin, the State of Florida, university researchers, and other responsible academic parties upon reasonable request.
The Company works with archaeologists to attempt to further ensure all sensitive archaeological guidelines are met or exceeded.

The
Company has investigated various outside technologies and non-scientific equipment to help better explore or document historic shipwreck
sites. To the present date, none of these technologies have been proven to have any efficacy with the exception of our own developed
and invented technologies utilized with the SeaSearcher. The SeaSearcher has however experienced multiple upgrades and hardware improvements
during the development phase that have caused operational delays that are expensive both in terms of repairs and down time. The Company,
along with its development partner, has developed a hand held metal discriminator for precision location of ferrous and nonferrous metals
based on the SeaSearcher technology, as well as other technologies to improve operating efficiencies. The Company will continue to experiment
with different technologies and will actively work with third parties, consultants and scientists to develop its own proprietary technology
which will result in extra expenses to the Company. These development expenses will continue indefinitely.

The
exploration and recovery of historic shipwrecks involves a multi-year, multi-stage process. It may take many years and/or be prohibitively
expensive to locate, if any are ever located at all, and recover valuable artifacts from historic shipwrecks. Locating and recovering
valuable artifacts is very challenging, expensive, and rare which is why the Company is developing the SeaSearcher at significant expense.
If the Company is not able to locate artifacts or treasure with significant value, then there is a high probability that the Company
will face adverse consequences which would likely result in the loss of both all capital invested in or loaned to the Company.

There
are a number of significant issues and challenges including, but not limited to, government regulation and/or the Company’s inability
to secure permits and contracts, lack of financing, lack of revenue and cash flow and continued losses from operations that make the
exploration and recovery of historic shipwrecks a speculative business venture. There is also significant expense involved
in research and ongoing educational programs. Research expenses may involve paying scientists for translations, and research dues and
fees for various historical entities such as archives, travel and accommodations, and research materials, as well as developmental expenses
for the SeaSearcher and the continued expense of teaching our divers archaeology.

Furthermore,
underwater recovery operations are inherently difficult and dangerous and may be delayed or suspended by weather, sea conditions or other
natural hazards. In addition, even though sea conditions in a particular search location may be somewhat predictable, the possibility
exists that unexpected conditions may occur, and already have occurred, that adversely affect the Company’s operations. It is also
possible that natural hazards may prevent or significantly delay search and recovery operations.

In
addition to natural hazards there may be constant repair and maintenance issues with historic shipwreck exploration and recovery vessels.
The Company’s past primary exploration vessel was an older vessel that was originally used in other capacities and has been converted
for use in historic shipwreck exploration and recovery operations. The repairs, maintenance and upkeep of vessels, is time consuming
and can be very expensive and there may be significant periods of vessel down time that results from needed repairs being made or a lack
of current financing to make repairs to the vessel.

Even
if the Company is able to obtain permits for historic shipwreck projects, there is a possibility that the shipwrecks may have already
been salvaged, may not be located, or may not have had anything valuable on board at the time that they sank. The potential advantage
of the newly developed technology is designed to potentially eliminate or reduce these risks. It is the Company’s intent to find
shipwrecks where available research suggests there were not any previous recovery efforts or past recovery efforts failed or were not
completed. In the event that valuable artifacts are located and recovered, it is possible that the cost of recovery will exceed the value
of the artifacts recovered. It is also possible that other entities, including both private parties and governmental entities, will assert
conflicting claims and challenge the Company’s rights to the recovered artifacts.

5

Moreover,
there is the possibility that should the Company be successful in locating and recovering artifacts that have significant archeological
and/or monetary value, that a country whose ship was salvaged may attempt to claim ownership of the artifacts by pursuing litigation.
In the event that the Company is able to make a valid claim to artifacts or other items at a shipwreck site, there is a risk of
theft of such items at sea, both before or after the recovery or while the artifacts are in transit to a safe destination, as well as
when stored in a secured location. Such thefts may not be adequately covered by insurance. Based on a number of these and other potential
issues the Company could spend a great deal of time and invest a large sum in a specific shipwreck project and receive very little or
no salvage claim or revenue for its work. The Company does have plans for security at sea, however it may never implement such plans.

There
is currently a limited trading market for our securities. We cannot assure when and if an active-trading market in our shares will be
established, or whether any such market will be sustained or sufficiently liquid to enable holders of shares of our common stock to liquidate
their investment in our company. The ability to deposit restricted shares has also become increasingly more difficult over the past several
years. Some clearing firms who used to clear low priced securities for multiple brokerage firms have closed or been acquired, resulting
in fewer brokerage firms that are willing or able to accept lower priced securities for deposit. Unless an investor has a large and well-established
relationship with a brokerage firm, it may be very challenging and potentially expensive to deposit lower priced securities. An investor
should consider consulting with professional financial advisers before making an investment in our securities. Furthermore, the sale
of unregistered and restricted securities by current shareholders, including shares issued to consultants and shares issued to settle
convertible promissory notes and to settle debt, may cause a significant drop in the market prices of the Company’s securities.
Also, because the Company primarily finances the operations with the sale of securities, an increase to the authorized shares may need
to be done from time to time.

Accordingly,
an investment in Seafarer’s securities is highly speculative and extremely risky and should only be considered by those investors
and lenders who do not require liquidity and who can afford to suffer a total loss of their investment. An investor should consult with
professional advisers before making an investment in our securities.

Competition

There
are a number of competing entities who are engaged in various aspects of the exploration and salvage of historic shipwrecks, and in the
future other competitors may emerge. Some of these companies are publicly traded companies and there are a number of small private companies,
as well as some loosely affiliated groups and individuals, who claim to be in this business as well. Some of these entities may be better
capitalized and may have greater resources to devote to the pursuit of locating and salvaging historic shipwrecks. A few of these competing
entities may also have significantly more experience than the Company in the exploration and recovery of historic shipwrecks. The Company
could be at a material competitive disadvantage as compared to competing entities that are better capitalized, have more resources and/or
who possess greater experience in the business. The Company will, and has, actively considered working with other entities in this industry
sector.

Lack
of Revenues and Cash Flow/Significant Losses from Operations

The
exploration and recovery of historic shipwrecks requires a multi-year, multi-stage process and it may be many years before any revenue
is generated from exploration and recovery activities, if ever. Without significant revenues and cash flow the Company does not have
reliable cash flow to pay its expenses. The Company relies on outside financing in the form of equity and debt and it is possible that
the Company may not be able to obtain outside financing in the future. If the Company is not able to obtain financing, then it would
more than likely be forced to cease operations and all capital invested in the Company or borrowed by the Company will be lost. If the
Company is unable to secure additional financing or meaningful revenues, our business may fail and our stock price may be adversely affected,
which could result in a total loss of investment capital. The raising of additional financing will, as it has over the last several years,
result in dilution of the Company’s current shareholders or a significant decrease in the value of the Company’s securities.

In
addition, the expenses associated with operating a small publicly traded company engaged in the historic shipwreck recovery business
are exorbitantly high. The cost of operations may include the cost of buying or leasing vessels, regular vessel maintenance and upkeep,
ongoing vessel repairs due to wear and tear and damage by natural or human causes, docking fees, fuel, upgrades, equipment costs, personnel
costs, insurance, registration costs, permitting, temporary lodging and provisions for divers and other personnel. In addition to the
operating expenses, a publicly traded company also incurs the significant recurring costs of maintaining publicly traded status, which
include, but are not limited to administrative, accounting, audit, executive, legal, including legal expenses required in responding
to comments from permitting agencies, shutdowns, and administrative appeals.

The
additional delays to the Company’s operational goals and objectives as a result of being prohibited by a state permitting agency
from utilizing ground disturbing work for periods of time have been harmful as the Company must still cover overhead and fixed expenses
while some activities are temporarily on hiatus. These combined expenses are particularly burdensome for a smaller public company. The
recurring expenses associated with being a publicly traded company focused on the exploration and recovery of historic shipwrecks may
cause the Company to be at a significant competitive disadvantage when compared to some of its competitors who are private companies
or other public companies.

6

Due
to these and other factors, the Company may not be able to continue as a going concern. If the Company is not able to continue as a going
concern, it is highly likely that all capital invested in the Company or borrowed by the Company will be lost. As discussed in Note 2
– Going Concern to our consolidated financial statements for the years ended December 31, 2025 and 2024, we have experienced operating
losses in every year since our inception resulting in an accumulated deficit. Based on our financial results as of December 31, 2025,
there are substantial doubts about the Company’s ability to continue as a going concern. If the Company is not able to continue
as a going concern, it is likely that all capital invested in the Company or borrowed by the Company will be lost.

The
Company has experienced a net loss in every fiscal year since inception. The Company’s net losses were $2,742,499 for the year
ended December 31, 2025 and $3,896,719 for the year ended December 31, 2024. The Company believes that it will continue to generate losses
from its operations for the foreseeable future and the Company may not be able to generate a profit in the long-term, or ever.

Governmental
Regulation

There
are very strict international, federal and state laws that govern the exploration and recovery of historic shipwrecks. While the Company
has been able to obtain some permits, there is no guarantee that the Company will be able to secure future permits or enter into agreements
with government agencies in order to explore and salvage historic shipwrecks. Seafarer believes they are the only company to be issued
a full recovery permit by FBAR since 1986, other than one entity with an Admiralty Claim. This demonstrates the difficulty of obtaining
a recovery permit from FBAR. There is a risk that government entities may enact legislation that is so strict that any recovery of artifacts
and cargo from historic shipwrecks will be nearly impossible. Additionally, permits and agreements with governmental agencies to conduct
historic shipwreck exploration and recovery operations are expensive, in terms of both direct costs and ongoing compliance costs. It
is also possible that the Company will not be successful in obtaining title or permission to excavate certain wrecks, even if the law
allows it. It is possible that permits that are sought for potential future international projects may never be issued, and if issued,
may not be legal or honored by the entities that issued them. For the above reasons, the Company has extended its research into shipwrecks
outside of State waters.

The
laws and regulations regarding the exploration and recovery of historic shipwrecks in waters controlled by the State of Florida are complex.
A large amount of time and expense is required to comply with the existing laws and regulations. For example, the State of Florida has,
in the past, proposed new rules and regulations regarding the exploration and recovery of shipwrecks in Florida waters. The Company believes
any new rules and regulations that are implemented into law would likely increase the cost of compliance and potentially force the Company
to cease its operations in Florida. It is possible that the State of Florida may enact additional laws that ultimately make it impossible
to conduct business as a commercial shipwreck exploration and recovery firm. It may also be possible that the State of Florida attempts
to enact legislation which altogether bans the commercial exploration and recovery of historic shipwrecks in State controlled waters.

There
is a possibility that new governmental regulations could be enacted at any time at the international, federal or state level that would
make it impossible for the Company to continue to attempt to locate and salvage historic shipwrecks. Governmental regulation at all levels
may substantially increase the costs and expenses incurred by the Company to obtain permits and agreements and comply with the regulations
and represent a significant risk to the Company and all companies engaged in the commercial exploration and recovery of historical shipwrecks.
This again reflects the need of the Company to continue exploration outside of State waters.

Furthermore,
governmental agencies may require various types of permits to explore shipwreck sites, and the permitting process is often lengthy and
complex. Obtaining permits and entering into agreements with governmental and quasi-governmental agencies to conduct historic shipwreck
exploration and recovery operations is generally a very complicated, time consuming, and expensive process. Moreover, the process of
entering into agreements and/or obtaining permits may be subject to lengthy delays, and in some cases in excess of a year. Some governmental
agencies may refuse to issue permits to the Company for recovery of artifacts or intentionally delay the permitting process utilizing
administrative requirements as a tactic to hamper and delay the process.

The
reasons for a lengthy permitting process and delays of existing permits may be due to a number of potential factors including but not
limited to requests by permitting agencies for additional information, forcing the Company to perform tasks that are not required by
law or regulation, addressing only one subject matter at a time instead of parallel actions and delaying the permitting process, submitted
applications that need to be revised or updated, newly discovered information that needs to be added to an application or agreement,
requests for core sampling, requests for carbon dating, changes to either the agreement or permit terms or revisions to other information
contained in the permit, excessive administrative time lags at permitting agencies, overly aggressive interpretation of statutes by permitting
authorities to attempt to hamper private entities engaged in the exploration and recovery of historic shipwrecks and related archaeological
materials, etc. The length of time it takes to obtain permits or enter into agreements, and the administrative time lag by permitting
agencies with regards to permitting issues may result in the Company having to expend significant resources while waiting to perform
exploration and recovery work with little or no visibility as to the timing of resolving such permitting issues.

There
are also strict environmental regulations associated with the exploration and recovery of historical shipwrecks. In order to explore
and recover shipwreck materials that are located in state regulated waters, the Company must obtain permission from both federal and
state environmental agencies in order to conduct operations. There is always the possibility that the Company could be denied access
to a historic shipwreck site based on federal or state environmental concerns.

7

Business
Continuity Plan

Seafarer
Exploration Corp. established a Business Continuity Group (“BCG”) consisting of members of our Board of Directors, our CEO,
and key advisors to monitor current events as they relate to our business and to be prepared to respond to any potential threats or issues
in order to protect the Company. Seafarer’s BCG periodically reviews developments concerning how the Company would respond to events
that significantly disrupt the economy and its business.

As
a part of its business continuity plan, Seafarer maintains a back office for some of its corporate records and information at the personal
residence of our CEO. Our CEO has agreed to allow his personal residence to be used as the Company’s headquarters and temporary
office space, if the need arises, at no charge to the Company.

Litigation

The
Company has been engaged in various litigations in the past (please see Item 3. Legal Proceedings below). In the future the Company could
be subject to litigation. Potential future litigations could materially affect our ability to operate our business, which would negatively
impact our results of operations and financial condition.

Historic
Shipwreck Exploration and Recovery in Florida

The
Company operates year-round, with some years having better diving in the winter and some years in the summer. Good weather conditions
may allow operations to extend into the fall and winter months at certain historic shipwreck sites. Inclement weather and hazardous ocean
conditions may hamper year round historical shipwreck exploration and recovery efforts when the Company is operating in waters off of
the coast of Florida and significantly limit the amount of days that the Company is able to conduct operations. During 2025 shifts in
the path and behavior of the Gulf Stream moving directly over the Juno contributed to the largest delay in operations in the eighteen
year history of the Company.

Other
factors that may hinder the Company’s ability to conduct year round operations include a lack of financing, the expiration of permits
and agreements or the need to renew or enter into permits and agreements with various governmental or quasi-governmental agencies, and
delays by state permitting agencies.

Juno
Beach Shipwreck Site

The
Company has previously performed some exploration and recovery operations at what it believes to be a shipwreck site located off of the
coast of Florida in northern Palm Beach County, more specifically in an area known as “Juno Beach” (the “Juno Beach
Shipwreck”). The Company had previously obtained a recovery permit from the State of Florida for the Juno Beach site. The recovery
permit expired in April of 2014. In March of 2015, Seafarer was awarded full rights to the Juno site pursuant to a court order, erasing
all rights of the Company’s previous partner with regards to the site. The Juno site was arrested permanently to Seafarer by the
U.S. Marshal’s offices in July of 2017 and in November 2017 the Company was granted final judgment on its federal admiralty claim
for the Juno Beach shipwreck site (See Item 3 below).

From
November 2017 until July 2021, the FBAR had requested that Seafarer submit new recovery permit applications on three separate occasions.
Two of the recovery applications were maliciously denied for reasons Seafarer found objectionable, and subsequently had the denial overturned.
After submitting the third recovery application, the FBAR correctly determined that they did not have the authority to issue the recovery
permit all along because the site was awarded exclusively to Seafarer by way of an Admiralty Claim. The Admiralty Claim was originally
provided to FBAR in November 2017. However, FBAR delayed Seafarer’s operations from continuing in Juno Beach until July 2021, a
period of approximately three years and eight months.

The
Company believes it is possible the Juno Beach Shipwreck site may potentially contain remnants of a sunken 1500s era ship; however, the
Company does not have definitive evidence of the ship’s country of origin. Due to the fact that the Company does not currently
have sufficient data to positively identify the potential Juno Beach shipwreck, or its country of origin, it is not possible to determine
with any degree of certainty whether or not the ship was originally carrying cargo of any significant value. The Company has continued
its archival research and has found archival data suggesting a possible identity for the shipwreck.

With
data from the Master Site Plan from entries by a Florida state archaeologist from 1988 who has since retired, which the Company believes
may have been intentionally withheld from it for several years, Seafarer believes that it is possible that a 1500s era shipwreck may
be located within the Company’s Admiralty Claim at Juno Beach, although it is possible that if the shipwreck is located it does
not contain any artifacts or treasure of significant value. Shipwreck material and remnants including pottery, cannon balls, musket balls,
ballast stones, nails, spikes, wood and scattered pieces of a sunken ship have all been found in the deleted area of a magnetometer survey.

The
Company will attempt to complete a SeaSearcher survey of the entire deleted area when certain conditions are met. While non-ferrous targets
have been identified by the SeaSearcher, none of these targets have been exhumed yet. There is also a possibility that there are no artifacts
of significant value located at the Juno Beach shipwreck site. Even if there are valuable artifacts and/or treasure located at the site,
recovering them may be difficult due to a variety of challenges that include, but are not limited to; inclement weather, hazardous ocean
conditions, sand and significant overburden that cover large areas of the site, strong multiple layer currents, etc.

8

Melbourne
Beach Shipwreck Site

Per
Florida Statutes, Seafarer made a timely request for renewal of the 2019 permit for Areas 1 and 2 on July 29, 2021. In January of 2022,
Seafarer received notification from the Florida Division of Historical Resources (“FDHR”) that its permits for Areas 1 and
2, which expired on January 19, 2022, has been continued indefinitely while the renewal request was being processed. The existing permits
for Areas 1 and 2 were renewed on March 22, 2024 and are valid until March 21, 2027.

Certain
Agreements

Agreement
to Explore a Shipwreck Site Located off of Melbourne Beach, Florida

In
March of 2014, Seafarer entered into a partnership and ownership with Marine Archaeology Partners, LLC (“MAP”) with the formation
of SQ. SQ was formed in the State of Florida for the purpose of permitting, exploration and recovery of artifacts from a designated area
on the east coast of Florida. Such site area is from a defined, contracted area by a separate entity, which a portion of such site is
designated from a previous contracted holding through the State of Florida. Under such agreement, Seafarer is responsible for costs of
permitting, exploration and recovery, and is entitled to 80% of such artifact recovery after the state of Florida has taken their 20%
under any future recovery permits. Seafarer has a 50% ownership, with designated management of the SQ coming from Seafarer. As of December
31, 2025, the partnership has had no operations. Seafarer is responsible for managing the site on behalf of SQ.

Florida
Division of Historical Resources Agreements/Permits

The
Company currently has two separately permitted Melbourne Beach area sites, called Area 1 and Area 2, that it is exploring. The permits
for Area 1 and Area 2 were renewed on March 22, 2024 and are valid until March 21, 2027.