EXHIBIT 99.1



COMMERCE GROUP CORP.

6001 NORTH 91ST STREET

MILWAUKEE, WISCONSIN  53225

(414) 462-5310

FAX (414) 462-5312

E-MAIL info@commercegroupcorp.com

WEBSITE www.commercegroupcorp.com



AND/OR COMMERCE/SANSEB JOINT VENTURE (Joint Venture)

AND/OR HOMESPAN REALTY CO., INC. (Homespan)

AND/OR ECOMM GROUP INC. (Ecomm)

AND/OR SAN LUIS ESTATES, INC. (SLE)

AND/OR SAN SEBASTIAN GOLD MINES, INC. (Sanseb)

AND/OR UNIVERSAL DEVELOPERS, INC. (UDI)

ALL LOCATED AT THE SAME ADDRESS





May 14, 2007





Mrs. Sylvia Machulak

President

General Lumber & Supply Co., Inc.

6001 North 91st Street

Milwaukee, Wisconsin  53225



Dear Mrs. Machulak:



At today's Commerce Group Corp. (Commerce) Directors' meeting, the

Directors were informed about the annual confirmation, disclosure and

status letter that you requested from Commerce, its subsidiaries, its

affiliates, and the Joint Venture and to establish and confirm the amount

due and the collateral pledged along with any other Commerce obligations

or agreements made to General Lumber & Supply Co., Inc. (GLSCO and/or

Lender)  as of Commerce's fiscal year ended March 31, 2007.  Today,

Commerce's Directors, by unanimous consent, approved, ratified and

confirmed the contents of this letter and authorized me to submit its

understanding of your status with Commerce, which is as follows:



1.   Promissory Notes and Other Obligations



a.  An open-ended, secured, on-demand promissory note no. 3 which

was originally issued to GLSCO on December 31, 1981 in the sum

of $16,836.37 and has been open-ended since that date and is to

include all future advances, services, charges and interest on a

monthly basis.  Pursuant to Commerce's Directors' approval on

October 1, 1990, the interest rate on this note was increased to

a rate of 4% over the prime rate base established by the First

National Bank of Chicago, Chicago, Illinois.  Beginning with

April 1, 1994, the interest rate is 4% over the prime rate base

established by the First National Bank of Chicago, Chicago,

Illinois, (then Bank One; now the prime rate published in the

Wall Street Journal), but not less than 16% per annum.  The

interest is payable monthly and the total amount due to GLSCO on

this promissory note as of March 31, 2007 is $2,673,457.47.

Commerce has



<PAGE>





Mrs. Sylvia Machulak

President

General Lumber & Supply Co., Inc.

May 14, 2007

Page 2 of 13 Pages





renewed this promissory note as of March 31, 2007 and a copy is

attached (Exhibit A).  A schedule including all of the

transactions pertaining to the activities relating to this note

during the fiscal year ended March 31, 2007 is also attached

(Exhibit A-1).



Commerce is no longer issuing monthly Notes for the payment of

interest, etc., but pursuant to our understanding, Commerce is

augmenting all additions and advances made by GLSCO, and it will

deduct any payments or credits made by Commerce to the current

open-ended, secured, on-demand, outstanding Notes issued or

obligations owed to GLSCO and Commerce will provide an annual

accounting and confirmation letter.



On May 9, 2005, Commerce's Directors authorized its Officers to

issue renewed annual note(s) (Exhibit B of the May 9, 2005

confirmation letter) so that the Lender will have a current

substituted dated debt instrument.  The Directors acknowledged

that the issuance of note(s) for each transaction are too

cumbersome and are not practicable to manage.  Also, the length

of time involved and the number of transactions make it

impractical to devote the time and effort to issue a note for

each transaction. However, beginning with this fiscal year which

ended March 31, 2007, the Directors are including the following

as Lender(s):  John E. Machulak and Susan R. Robertson, husband

and wife (M&R), the Machulak, Robertson & Sodos, S.C. Law Firm

(Law Firm), Circular Marketing, Inc. (CMI) and Edward A.

Machulak as an individual (EAM).  Therefore, the Directors have

unanimously agreed to continue to embrace this resolution, which

was adopted on May 9, 2005:



WHEREAS, in the past 20 years or more the following

parties: General Lumber & Supply Co., Inc. (GLSCO); Edward L.

Machulak  as an individual and not as a Director or Officer of

Commerce (ELM); the Edward L. Machulak Rollover Individual

Retirement Account (ELM RIRA), the Sylvia Machulak Rollover

Individual Retirement Account (SM RIRA), and Sylvia Machulak, as

a consultant and as an individual (SM), hereafter collectively

and individually identified as the Lender(s), have accounted for

advancing cash funds, earning accrued interest, and for

appropriate credit which was reconciled to the open-ended,

secured, on-demand notes(s); and





<PAGE>



Mrs. Sylvia Machulak

President

General Lumber & Supply Co., Inc.

May 14, 2007

Page 3 of 13 Pages





WHEREAS, the Directors desire to minimize the record

keeping in these transactions without jeopardizing, diminishing,

altering, changing or losing any rights that the Lenders have by

changing the procedures in handling the recording of any

notes(s) issued or to be issued; and



WHEREAS, in order to provide an easier accounting facility

by renewing the notes(s) on an annual basis to coincide with the

Company's fiscal year (which presently ends on March 31) and to

incorporate said renewed note(s) with the annual confirmation

agreement(s); and



WHEREAS, prior to the change to issue substituted renewed

note(s), the initial promissory note(s) were considered to be

open-ended, secured, on-demand and the additions and deductions

were recognized by separate accounting records; therefore, be it



RESOLVED, That the Directors authorize and empower the

Officers to substitute and issue renewed consolidated

promissory note(s) at the end of each fiscal year beginning

with the Company's fiscal year ended March 31, 2005 to the

following: General Lumber & Supply Co., Inc.  (GLSCO);

Edward L. Machulak as an individual and not as a Director

or Officer of Commerce (ELM); the Edward L. Machulak

Rollover Individual Retirement Account (ELM RIRA), the

Sylvia Machulak Rollover Individual Retirement Account (SM

RIRA), and Sylvia Machulak, as a consultant and as an

individual (SM), hereafter collectively and individually

identified as the Lender(s); and



BE IT FURTHER RESOLVED, That the Officers of the

Company are authorized and empowered to assure the

Lender(s) that by substituting and consolidating the

existing note(s) and issuing the renewed note(s) on the

last day of the Company's fiscal year beginning with March

31, 2005 with the understanding that the intention is that

the Lender(s) will not jeopardize, lose, diminish, risk,

alter or change any rights, including the pledge of

collateral, that are inherent with the initial note(s) by

the issuance of annual renewed open-ended, secured,

on-demand promissory note(s); and





<PAGE>



Mrs. Sylvia Machulak

President

General Lumber & Supply Co., Inc.

May 14, 2007

Page 4 of 13 Pages



BE IT FURTHER RESOLVED, That the Directors acknowledge

that the only purpose of the change and substitution to

issue annual renewed notes(s) is for the convenience,

reduced accounting and reducing the paperwork involved; and



BE IT FURTHER RESOVED, That the Officers are

authorized and empowered to perform any act that they deem

necessary to accommodate the purpose of issuing annual

renewed note(s).



As of March 31, 2007, the following parties are collectively and

individually identified as the Lender(s): General Lumber & Supply

Co., Inc.  (GLSCO); Edward L. Machulak  as an individual and not as

a Director or Officer of Commerce (ELM); the Edward L. Machulak

Rollover Individual Retirement Account (ELM RIRA), the Sylvia

Machulak Rollover Individual Retirement Account (SM RIRA), Sylvia

Machulak, as a consultant and as an individual (SM), John E.

Machulak and Susan R. Robertson, husband and wife (M&R), the

Machulak, Robertson & Sodos, S.C. Law Firm (Law Firm), Circular

Marketing, Inc. (CMI) and Edward A. Machulak as an individual (EAM).



b.  Commerce leased approximately 3,100 square feet on a

month-to-month basis for its corporate headquarter's office; the

monthly rental charge was $2,145 since October 1, 1992.  As of

December 1, 1995, Commerce increased the space it rents to 4,032

square feet, and the monthly rental charge was increased to

$2,789.  All other terms and conditions of the Amended October

1, 1992 Lease Agreement remain the same.  (Reference is made to

Exhibit B, December 1, 1995 Amended Lease Agreement, included in

April 5, 1996 confirmation letter.) (Reference is made to

Exhibit B, Lease Agreement, included in April 12, 1993

confirmation letter.)



c.  Commerce also acknowledges that it purchases on an open account

from GLSCO from time to time materials, supplies etc. that it

needs for itself or for the Joint Venture.  Some of the

purchases are made through GLSCO because Commerce does not have

the credit availability from the various sellers of goods,

merchandise, etc. that is required by it or the Joint Venture.

The amount due from time to time varies.  As of March 31, 2007,

there is nothing due on this open account.





<PAGE>



Mrs. Sylvia Machulak

President

General Lumber & Supply Co., Inc.

May 14, 2007

Page 5 of 13 Pages





d.  GLSCO from time to time has canceled part of its debt by the

purchase of restricted Commerce common shares based on a price

determined by the Directors or at a price sold to third party

purchasers at an arms-length transaction.  There were no

transactions consummated during this fiscal year.



e.  In order to provide continuity and to make an orderly transition

of the Standing Rock Campground (SRC) operations, the parties

agreed that Commerce would operate the SRC until such time that

GLSCO would terminate this agreement.



Commerce retained the profits earned from the SRC operations and

the following describes the transactions that took place:



Fiscal year end                       Revenues      Expenses        Profit

--------      --------        ------

March 31, 2002                     $ 73,364.97    $40,202.17    $33,162.80

March 31, 2003                       68,304.07     41,009.24     27,294.83

-----------    ----------    ----------

Balances                         $141,669.04    $81,211.41    $60,457.63



Interest July 1, 2001

through March 31, 2003                                          11,918.31

April 1, 2003 Total Addition                                    ----------

to GLSCO Note (GJ4-P2; Entry 4-2)                              $72,375.94

==========



March 31, 2004                     $58,548.87     $37,956.32    $20,592.55

April 1, 2004 Entry GJ4-P1;                                     ==========

Addition to GLSCO Note                                         $20,592.55

==========



March 31, 2005                     $58,182.12     $37,093.47    $21,088.65

April 1, 2005 Entry GJ4-P1;                                     ==========

Addition to GLSCO Note                                         $21,088.65

==========



March 31, 2007                     $41,911.50     $38,972.05    $ 2,939.45

March 31, 2007;                                                 ==========

Addition to GLSCO Note                                         $ 2,939.45

==========





f.  On March 31, 2007, the amount due of $2,939.45 by Commerce to

GLSCO was transferred to the notes payable due to GLSCO.



2.   Collateral Pledged



The collateral specifically pledged to GLSCO or as otherwise noted

is as follows:



a.  San Luis Estates, Inc. (SLE) Certificate No. 24 which is dated

December 31, 1981, consisting of 48,645 common shares, $0.50 par

value, being 50% of the total issued and outstanding shares.

SLE and Commerce agree that no additional shares of any kind

whatsoever of SLE will be issued as long as any monies are due

to GLSCO.  Reference is made to Exhibit 3 included in the April

9, 1990 confirmation letter.







<PAGE>



Mrs. Sylvia Machulak

President

General Lumber & Supply Co., Inc.

May 14, 2007

Page 6 of 13 Pages





b.  Commerce/Sanseb Joint Venture (Joint Venture)



Commerce and Sanseb agree that ELM (the other Lenders were

included later) has as collateral, the assignment and pledge of

all of their rights, titles, claims, remedies, and interest

whatsoever in the Joint Venture which was formed on September

22, 1987.  In the event of default, whatever interest Commerce

and Sanseb have in the Joint Venture will be transferred to ELM

and it will include whatever assets are owned by the Joint

Venture, including, but not limited to the precious metal ore

reserves.  Reference is made to Exhibit 5 included in the April

9, 1990 confirmation letter.



c.  Uniform Commercial Code Filing - all other specific assets



An interest with ELM in filing financing statements under the

Uniform Commercial Code by an assignment and pledge of all

corporate assets, such as but not limited to the property of

Commerce, Joint Venture, SLE, and Homespan, wherever located,

now owned or hereafter acquired is as follows:  all accounts,

all land contract receivables, contract rights, instruments and

chattel paper; all inventory, all jewelry and precious stones,

and all documents relating to inventory, including all goods

held for sale, lease or demonstration, to be furnished under

contracts of service, and raw materials, work in process and

materials and supplies used or consumed in the business of

Commerce, the Joint Venture, SLE, and Homespan; all office

furniture, fixtures and all other equipment; all general

intangibles, all stock and securities of any kind, and all

rights, titles and interest in the Commerce Group Corp./San

Sebastian Gold Mines, Inc. Joint Venture, and all additions and

accessions to, all spare and repair parts, special tools,

equipment and replacements for all returned or repossessed goods

the sale or lease of which gave rise to, and all proceeds and

products of the foregoing.  Reference is made to the Wisconsin

Department of Financial Institutions Uniform Commercial Code

filing, Exhibit 6, included in the April 9, 1990 confirmation

letter, the renewed UCC-1 filing on December 23, 1996, Exhibit

B, included in the April 14, 1997 confirmation letter, and the

UCC-4 continuation filing on June 27, 2001 at 8:55 a.m., Filing

#02078155 (Exhibit B of the May 13, 2002 confirmation letter).

A UCC Financing Statement was electronically filed with the

Wisconsin Department of Financial Institutions on January 5,

2007 (Filing #070000277016).



<PAGE>



Mrs. Sylvia Machulak

President

General Lumber & Supply Co., Inc.

May 14, 2007

Page 7 of 13 Pages



d.  Acknowledgement of previously recorded collateral provided to

the Lenders



Historical information - San Sebastian Gold Mine Concession



GLSCO, ELM, the ELM RIRA, the SM RIRA, and SM collectively and

individually identified as the Lender(s), have been assigned on

October 19, 1987, all of the rights, titles, claims, remedies

and interest in the Joint Venture, and to the mine concession

granted by the Government of El Salvador to Mineral San

Sebastian, S.A. de C.V (Misanse) on July 23, 1987, and

thereafter from time to time amended, and which Misanse then

assigned to the Joint Venture on September 22, 1987.  This

collateral specifically includes, but is not limited to, all of

the San Sebastian Gold Mine (SSGM) precious metal ore reserves.

Commerce and the Joint Venture have the right to assign this and

any subsequent concession agreement.  Reference is made to

Exhibit 5 included in the April 9, 1990 confirmation letter.



The following collateral has been previously assigned to the

Lenders pursuant to resolutions adopted by the Directors:



(1) Commerce/Sanseb Joint Venture (Joint Venture)



Both Commerce and San Sebastian Gold Mines, Inc. have

assigned all of the rights, title, claims, remedies and

interest that each has in the Joint Venture to the Lenders.

Reference is made to Historical information - San Sebastian

Gold Mine Concession.



(2) New SSGM Exploration Concession/License (New SSGM) -

approximately 40.7694 square kilometers (10,070 acres)

Government of El Salvador Resolution No. 27.



On October 20, 2002, the Company applied for the New SSGM,

which covers an area of 42 square kilometers and includes

approximately 1.2306 square kilometers of the Renewed SSGM.

The New SSGM is in the jurisdiction of the City of Santa

Rosa de Lima in the Department of La Union and in the Nueva

Esparta in the Department of Morazan, Republic of El

Salvador, Central America.  On February 24, 2003, the El

Salvador Department of Hydrocarbons and Mines (DHM) issued

the New SSGM for a period of four years starting from the

date following the notification of this resolution which was

received on March 3, 2003.  The New SSGM may be extended for

two two-year periods, or for a total of eight years.



<PAGE>



Mrs. Sylvia Machulak

President

General Lumber & Supply Co., Inc.

May 14, 2007

Page 8 of 13 Pages



Besides the San Sebastian Gold Mine,  three other formerly

operative gold and silver mines known as the La Lola Mine,

the Santa Lucia Mine, and the Tabanco Mine are included in

the New SSGM and are being explored.  The Company has

complied as required by filing its annual activity report

and it paid the annual surface tax.  This concession had

been assigned collectively to all of the Lenders named

herein on May 12, 2003 and the assignment was included in

the May 12, 2003 confirmation agreement as Exhibit B.



(3) Lease agreement by and between Mineral San Sebastian

Sociedad Anomina de Capital Variable (Misanse) and Commerce

dated January 14, 2003



The term of this lease agreement coincides with the term of

the Renewed San Sebastian Gold Mine Exploitation Concession

and consists of 1,470 acres owned by Misanse.  This lease

agreement has been assigned to all of the Lenders named

herein on May 12, 2003 and the assignment was included in

the May 12, 2003 confirmation agreement as Exhibit B.



(4) Renewed San Sebastian Gold Mine Exploitation

Concession/License (Renewed SSGM) - approximately 1.2306

square kilometers (304 acres), Department of La Union, El

Salvador, Central America (pledged and assigned as

collateral on May 10, 2004) Government of El Salvador

Agreement No. 591.



On September 6, 2002, at a meeting held with the El

Salvadoran Minister of Economy and the DHM, it was agreed to

submit an application for the Renewed SSGM for a 30-year

term and to simultaneously cancel the concession obtained on

July 23, 1987.  On September 26, 2002, the Company filed

this application.  On February 28, 2003 (received March 3,

2003) the DHM admitted to the receipt of the application and

the Company proceeded to file public notices as required by

Article 40 of the El Salvadoran Mining Law and its Reform

(MLIR).  On April 16, 2003, the Company's El Salvadoran

legal counsel filed with the DHM notice that it believed

that it complied with the requirements of Article 40, and

that there were no objections; and requested that the DHM

make its inspection as required by MLIR Article 42.  The

Company then provided a bond which was required by the DHM

to protect third parties against any damage caused from the

mining operations, and it simultaneously paid the annual

surface tax.  On August 29, 2003 the Office of the Ministry

of Economy formally presented the Company with the

twenty-year Renewed SSGM





<PAGE>



Mrs. Sylvia Machulak

President

General Lumber & Supply Co., Inc.

May 14, 2007

Page 9 of 13 Pages





which was dated August 18, 2003.  This Renewed SSGM replaces

the collateral that the same parties held with the previous

concession.  On May 20, 2004 (delivered June 4, 2004) the

Government of El Salvador, under their Agreement Number 591,

extended the exploitation concession for a period of 30

years.  A copy of the assignment dated May 10, 2004, is

attached to the May 10, 2004 confirmation letter as Exhibit

B and the Renewed SSGM agreement is attached to Exhibit B

and referred to as Exhibit 1.



(5) San Cristobal Mill and Plant (SCMP) three-year lease by and

between Commerce and Corporacion Salvadorena de Inversiones

(Corsain), an El Salvadoran governmental agency, executed on

Monday, April 26, 2004, retroactive to November 13, 2003.

Pledged and assigned as collateral on May 10, 2004.



The renewed three-year SCMP lease for the property located

near the City of El Divisadero was finalized and executed on

Monday, April 26, 2004, and is retroactive to November 13,

2003.  This May 10, 2004 assignment is included in the May

10, 2004 confirmation letter as Exhibit B and the lease

agreement is attached to Exhibit B and referred to as

Exhibit 2. This lease agreement is in the process of being

renewed.



(6) Nueva Esparta Exploration Concession/License (Nueva Esparta)

- 45 square kilometers (11,115 acres) Resolution No. 271 -

pledged and assigned as collateral on May 9, 2005



On or about October 20, 2002, the Company filed an

application with the DHM for the Nueva Esparta Exploration

Concession/License which consists of 45 square kilometers

and is located north and adjacent to the New SSGM.  On May

25, 2004 the Government of El Salvador, under their

Resolution No. 271, issued the Nueva Esparta Exploration

Concession/License for a period of four years starting from

the date following the notification of this resolution which

was received on June 4, 2004.  This concession/license may

be extended for two two-year periods or for a total of eight

years.  This rectangular area is in the Departments of La

Union (east) and Morazan (west) and in the jurisdiction of

the City of Santa Rosa de Lima, El Salvador, Central

America.  Included in the Nueva Esparta are eight other

formerly operated gold and silver mines known as:  the

Banadero Mine, the



<PAGE>



Mrs. Sylvia Machulak

President

General Lumber & Supply Co., Inc.

May 14, 2007

Page 10 of 13 Pages





Carrizal Mine, the Copetillo Mine, the Grande Mine, the La

Joya Mine, the Las Pinas Mine, the Montemayor Mine, and the

Oro Mine.  A copy of the assignment dated May 9, 2005 was

attached to the May 9, 2005 confirmation letter as Exhibit C

and the Nueva Esparta Exploration Concession was attached to

Exhibit C and referred to as Exhibit 1.



(7) Acknowledgment of collateral provided through May 14, 2007



Commerce's Directors have on May 14, 2007 authorized and

directed Commerce's Officers to assign all of the rights,

titles, claims, remedies and interest in all of its assets

that it has including any assets owned by the Joint Venture,

to GLSCO, ELM, the ELM RIRA, the SM RIRA, SM, and from March

31, 2007 to include M&R, the Law Firm, CMI and EAM,

collectively and individually referred to as Lenders, as

additional collateral for all of the outstanding loans and

obligations as of March 31, 2007, including all future

advances of any kind.



3.   Cross Pledge Collateral Agreement



GLSCO, ELM, the ELM RIRA, the SM RIRA and SM individually are

entitled to specific collateral that has been pledged to them by

Commerce, its subsidiaries, affiliates and the Joint Venture.  Upon

default by Commerce, or its subsidiaries or affiliates or the Joint

Venture, then GLSCO, ELM, the ELM RIRA, the SM RIRA and SM have the

first right to the proceeds from the specific collateral pledged to

each of them.  Commerce, its subsidiaries, affiliates, and the Joint

Venture also have cross-pledged the collateral without diminishing

the rights of the specific collateral pledged to each of the

following:  GLSCO, ELM, the ELM RIRA, the SM RIRA and SM.  The

purpose and the intent of the cross pledge of collateral is to

assure GLSCO, ELM, the ELM RIRA, the SM RIRA, and SM, that each of

them would be paid in full; thus, any excess collateral that would

be available is for the purpose of satisfying any debts and

obligations due to each of the named parties including M&R, the Law

Firm, CMI and EAM.  The formula to be used (after deducting the

payments made from the specific collateral) is to total all of the

debts due to GLSCO, ELM, the ELM RIRA, the SM RIRA, SM, and from

March 31, 2007 to include M&R, the Law Firm, CMI and EAM, and then

to divide this total debt into each individual debt to establish

each individual's percentage of the outstanding debt due.  This

percentage then will be multiplied by the total of the excess

collateral to determine the amount of proceeds each party should

receive from the excess collateral.  Then the amount due to each of

them would be distributed accordingly.



<PAGE>



Mrs. Sylvia Machulak

President

General Lumber & Supply Co., Inc.

May 14, 2007

Page 11 of 13 Pages





4.   Cancellation of Inter-Company Debts Upon Default



Since certain of the collateral specifically or collectively pledged

to GLSCO, ELM, the ELM RIRA, the SM RIRA, SM and from March 31, 2007

to include M&R, the Law Firm, CMI and EAM, consists of the common

stock of Homespan, Ecomm, Sanseb, SLE, Misanse, UDI and the interest

in the ownership of the Joint Venture, Commerce agreed, upon default

of the payment of principal or interest to any of the individual

Lender(s) mentioned herein, that it will automatically cancel any

inter-company debts owed to Commerce by any of its wholly-owned

subsidiaries or affiliates or the Joint Venture at such time as any

of the stock or Joint Venture ownership is transferred to the

collateral holders as a result of default of any promissory note.



5.   Guarantors



This agreement further confirms that Commerce and all of the

following are guarantors to the obligations due to GLSCO and to the

loans made by GLSCO to Commerce:  Joint Venture, Homespan, Ecomm,

SLE, Sanseb and UDI.  They jointly and severally guarantee payment

of the note(s) that they caused to be issued and also agree that

these note(s) may be accelerated in accordance with the provisions

contained in the agreement and/or any collateral or mortgages

securing these notes.  Also, Commerce, all of its subsidiaries and

the Joint Venture agree to the cross pledge of collateral for the

benefit of GLSCO, ELM, the ELM RIRA, the SM RIRA, SM, and from March

31, 2007 to include M&R, the Law Firm, CMI and EAM.  Reference is

made to Exhibit 7 included in the April 9, 1990 confirmation letter.



6.   Re-Execution Agreement(s)



In the event GLSCO deems that it is necessary or advisable for GLSCO

to have Commerce re-execute any document(s) entered into, including,

but not limited to the promissory note(s) or collateral

agreement(s), Commerce will re-execute such document(s) reasonably

required by GLSCO.  Commerce also acknowledges that Commerce may be

liable to pay certain costs related to any of the transactions

entered into with GLSCO.  If at a later date GLSCO determines that

an error has been made in the payment of such costs to it then it

may demand payment and Commerce does hereby agree to make such

payment forthwith.  All requests for corrections of any errors

and/or payment of costs shall be complied with by Commerce within

seven (7) days of GLSCO's written request.   The failure of Commerce

to comply with Commerce's obligation(s) hereunder shall constitute a

default and shall entitle GLSCO







<PAGE>



Mrs. Sylvia Machulak

President

General Lumber & Supply Co., Inc.

May 14, 2007

Page 12 of 13 Pages





to the remedies available for default under any provisions of the

agreements including, but not limited to the promissory note(s)

and/or the collateral pledge agreement(s) and/or any other Commerce

obligation(s).



7.   Omissions



Commerce believes that it has included all of its obligations,

monies due and has listed all of the collateral due to GLSCO,

however, since these transactions have taken place over  a long

period of time in which changes could have taken place, it is

possible that inadvertently some item(s), particularly collateral,

could have been omitted.  If that should prove to be a fact, then

Commerce, the Joint Venture, Homespan, Ecomm, SLE, Sanseb, and UDI

agree that those omissions of collateral, if any, are meant to be

included as collateral under this confirmation agreement.



If you are in agreement with the contents of this letter, please sign

below and return one copy to Commerce.



Very truly yours,



COMMERCE GROUP CORP.



/s/ Edward A. Machulak



Edward A. Machulak

Secretary





<PAGE>



Mrs. Sylvia Machulak

President

General Lumber & Supply Co., Inc.

May 14, 2007

Page 13 of 13 Pages



The contents of this letter are agreed by the following:



COMMERCE/SANSEB JOINT VENTURE            HOMESPAN REALTY COMPANY, INC.

as Guarantor (Joint Venture)             as Guarantor (Homespan)



/s/ Edward L. Machulak                   /s/ Edward L. Machulak



---------------------------------------  --------------------------------------

By:  Edward L. Machulak, Auth. Designee  By:  Edward L. Machulak, President





ECOMM GROUP INC.                         SAN LUIS ESTATES, INC.

as Guarantor (Ecomm)                     as Guarantor (SLE)



/s/ Edward A. Machulak                   /s/ Edward L. Machulak



---------------------------------------  --------------------------------------

By:  Edward A. Machulak, President       By:  Edward L. Machulak, President





SAN SEBASTIAN GOLD MINES, INC.           UNIVERSAL DEVELOPERS, INC.

as Guarantor (Sanseb)                    as Guarantor (UDI)



/s/ Edward L. Machulak                   /s/ Edward L. Machulak



---------------------------------------  --------------------------------------

By:  Edward L. Machulak, President       By:  Edward L. Machulak, President





Accepted by:



GENERAL LUMBER & SUPPLY CO., INC.





/s/ Sylvia Machulak



---------------------------------------

By:  Sylvia Machulak, President

Date:  May 14, 2007











<PAGE>



EXHIBIT A TO EXHIBIT 99.1



RENEWED PROMISSORY NOTE





Borrower: Commerce Group Corp.       Lender: General Lumber & Supply Co., Inc.

6001 North 91st Street             6001 North 91st Street.

Milwaukee, WI  53225               Milwaukee, WI  53225



Principal Amount:        $2,673,457.47

Initial Rate:            4.000% + prime rate, but not less than 16.000%

Date of Renewed Note:    March 31, 2007



PROMISE TO PAY.  COMMERCE GROUP CORP. ("Borrower") promises to pay to

GENERAL LUMBER & SUPPLY CO., INC. ("Lender"), or order, in lawful money

of the United States of America, the principal amount of Two Million Six

Hundred Seventy Three Thousand Four Hundred Fifty Seven and 47/100

Dollars  ($2,673,457.47), together with interest, paid monthly, on the

unpaid principal balance from March 31, 2007, until paid in full.



PAYMENT.  This is an open-ended, secured, on-demand payment, renewed

promissory note.  Interest is to be paid monthly.  The Lender, at its

discretion, can add the monthly interest due to the principal balance.

Unless otherwise agreed or required by applicable law, payments will be

applied first to any accrued unpaid interest; and then to principal.  The

annual interest rate for this Note is computed on a 365/360 basis; that

is, by applying the ratio of the annual interest rate over a year of 360

days, multiplied by the outstanding principal balance, multiplied by the

actual number of days the principal balance is outstanding and the

interest is payable monthly.  Borrower will pay Lender at Lender's

address shown above or at such other place as Lender may designate in

writing.



VARIABLE INTEREST RATE.  The interest rate on this Note is subject to

change from time to time based on changes in the prime rate as quoted in

the Wall Street Journal plus four percent, but not less than sixteen

percent per annum.  Borrower understands that Lender may make loans to

the Borrower based on other rates as well. The prime rate as of this date

is 8.250% per annum.  The interest rate to be applied to the unpaid

principal balance of this Note will be at a rate of 4.000 percentage

points over the prime rate, but not less than 16.000% per annum.  NOTICE:

Under no circumstances will the interest rate on this Note be less than

16.000% per annum or more than the maximum rate allowed by applicable

law.



PREPAYMENT.  Borrower may pay without penalty all or a portion of the

amount owed earlier than it is due.  Early payments will not, unless

agreed to by Lender in writing, relieve Borrower of Borrower's obligation

to pay on demand, the entire amount due.  Rather, any payment will reduce

the principal balance due.  Borrower agrees not to send Lender payments

marked "paid in full," "without recourse," or similar language.  If

Borrower sends such a payment, Lender may accept it without losing any of

Lender's rights under this Note, and Borrower will remain obligated to

pay any further amount owed to Lender.



INTEREST AFTER DEFAULT.  Upon default, including failure to pay on

demand, Lender, at its option, may, if permitted under applicable law,

increase the variable interest rate on this Note to 6.000 percentage

points over the prime rate or over the 16.000% rate, whichever is higher.

The interest rate will not exceed the maximum rate permitted by

applicable law.



DEFAULT.  Each of the following shall constitute an event of default

("Event of Default") under this Note:



Payment Default.  Borrower fails to make any payment when demand is

made under this Note.



Other Defaults.  Borrower fails to comply with or to perform any

other term, obligation, covenant or condition contained in this Note

or in any of the related documents or to comply with or to perform

any term, obligation, covenant or condition contained in any other

agreement between Lender and Borrower.





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Default in Favor of Third Parties.  Borrower or any Grantor defaults

under any loan, extension of credit, security agreement, purchase or

sales agreement, or any other agreement, in favor of any other

creditor or person that may materially affect any of Borrower's

property or Borrower's ability to repay this Note or perform

Borrower's obligations under this Note or any of the related

documents.



False Statements.  Any warranty, representation or statement made or

furnished to Lender by Borrower or on Borrower's behalf under this

Note or the related documents is false or misleading in any material

respect, either now or at the time made or furnished or becomes

false or misleading at any time thereafter.



Insolvency.  The dissolution or termination of Borrower's existence

as a going business, the insolvency of Borrower, the appointment of

a receiver for any part of Borrower's property, any assignment for

the benefit of creditors, any type of creditor workout, or the

commencement of any proceeding under any bankruptcy or insolvency

laws by or against Borrower.



Creditor or Forfeiture Proceedings.  Commencement of foreclosure or

forfeiture proceedings, whether by judicial proceeding, self-help,

repossession or any other method, by any creditor of Borrower or by

any governmental agency against any collateral securing the loan.

However, this Event of Default shall not apply if there is a good

faith dispute by Borrower as to the validity or reasonableness of

the claim which is the basis of the creditor or forfeiture

proceeding and if Borrower gives Lender written notice of the

creditor or forfeiture proceeding and deposits with Lender monies or

a surety bond for the creditor or forfeiture proceeding, in an

amount determined by Lender, in its sole discretion, as being an

adequate reserve or bond for the dispute.



Events Affecting Guarantor.  Any of the preceding events occurs with

respect to any Guarantor of any of the indebtedness or any Guarantor

disputes the validity of, or liability under, any guaranty of the

indebtedness evidenced by this Note.



Adverse Change.  A material adverse change occurs in Borrower's

financial condition, or Lender believes the prospect of payment or

performance of this Note is impaired.



Insecurity.  Lender in good faith believes itself insecure.



LENDER'S RIGHTS.  Upon default or upon demand, the Lender may declare the

entire unpaid principal balance on this Note and all accrued unpaid

interest immediately due, and then Borrower will pay that amount.



COLLATERAL.  Borrower acknowledges this Note is secured by all security

agreements, guarantees, mortgages, and other security instruments

previously granted, contemporaneously granted, and granted in the future,

and it has the collateral and other rights all as contained in a certain

confirmation agreement dated May 10, 2004 between all parties contained

therein, and as subsequently amended and updated from time to time.



ATTORNEYS' FEES; EXPENSES.  Lender may hire or pay someone else to help

collect this Note if Borrower does not pay.  Borrower will pay Lender

that amount.  This includes, subject to any limits under applicable law,

Lender's attorneys' fees and Lender's legal expenses, whether or not

there is a lawsuit, including attorneys' fees, expenses for bankruptcy

proceedings (including efforts to modify or vacate any automatic stay or

injunction), and appeals.  If not prohibited by applicable law, Borrower

also will pay any court costs, in addition to all other sums provided by

law.



GOVERNING LAW.  This Note will be governed by, construed and enforced in

accordance with the laws of the State of Wisconsin.  This Note has been

accepted by Lender in the State of Wisconsin.





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OTHER LOAN AGREEMENTS.  If Borrower and Lender have either previously or

contemporaneously entered into a Loan or Confirmation Agreements, it is

agreed that this Note is subject to the terms and conditions of such Loan

or Confirmation Agreements.  For purpose of this provision, Loan or

Confirmation Agreements shall include, but not be limited to, a Business

Loan Agreement or any other Loan or Confirmation Agreements.



SUCCESSOR INTERESTS.  The terms of this Note shall be binding upon

Borrower, and upon Borrower's successors and assigns, and shall inure to

the benefit of Lender and Lender's heirs, executors, administrators,

successors and assigns.



GENERAL PROVISIONS.  This Note benefits Lender and its successors and

assigns, and binds Borrower and Borrower's successors, assigns, and

representatives.  Lender may delay or forgo enforcing any of its rights

or remedies under this Note without losing them.  Borrower and any other

person or corporation who signs, guarantees or endorses this Note, to the

extent allowed by law, waive presentment, demand for payment, and notice

of dishonor.  Upon any change in the terms of this Note, and unless

otherwise expressly stated in writing, no party who signs this Note,

whether as maker, guarantor, accommodation maker or endorser, shall be

released from liability.  All such parties agree that Lender may renew or

extend (repeatedly and for any length of time) this loan or release any

party or guarantor or collateral; or impair, fail to realize upon or

perfect Lender's security interest in the collateral; and take any other

action deemed necessary by Lender without the consent of or notice to

anyone.  All such parties also agree that Lender may modify this loan

without the consent of or notice to anyone other than the party with whom

the modification is made.  The obligations under this Note are joint and

several.



PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE

PROVISIONS OF THIS NOTE, INCLUDING THE INTEREST RATE PROVISIONS.

BORROWER AGREES TO THE TERMS OF THE NOTE.



BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.



BORROWER:



COMMERCE GROUP CORP.



/s/ Edward L. Machulak

----------------------------------

By:  Edward L. Machulak, President









/s/ Edward A. Machulak

------------------------------------------------------

By:  Edward A. Machulak, Vice President and Secretary







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EXHIBIT A-1 TO EXHIBIT 99.1



(Schedule of all transactions pertaining to

the activities relating to Exhibit A to

Exhibit 99.1 for the fiscal year ending March 31, 2007

has been purposely omitted as it only reflects

the calculations of the principal and interest.)