UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934

                    For the fiscal year ended March 31, 2004

                          Commission File Number 1-7375

                              COMMERCE GROUP CORP.

             (Exact name of registrant as specified in its charter)

                         WISCONSIN                                   39-1942961
(State or other jurisdiction of
incorporation or organization)                  (I.R.S. Employer Identification
No.)

                             6001 North 91st Street
                         Milwaukee, Wisconsin 53225-1795
               (Address of principal executive offices) (Zip Code)

             Registrant's telephone number, including area code: (414) 462-5310

Securities registered pursuant to Section 12(b) of the Act:

                                                          Name of each exchange
                  Title of each class                       on which registered
     Common Shares $0.10 par value      Over The Counter Bulletin Board (OTC BB)


Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes __X__ No __

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

Indicate by check mark whether the Registrant is an accelerated file (as defined
in Rule 12b-2 of the Exchange Act). Yes __ No __X__

The aggregate market value of the 15,662,802 shares held by nonaffiliates of the
registrant  based on the closing  price of the OTC BB on September  30, 2003 was
approximately $4,072,329.

At March 31, 2004, there were 22,681,591 shares of the registrant's common stock
outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The  information  required  by Part III of Form 10-K is  incorporated  herein by
reference to the registrant's  definitive  Proxy Statement  relating to its 2004
Annual Meeting of Stockholders,  which will be filed with the Commission  within
120 days after the end of the registrant's fiscal year.


                                               COMMERCE GROUP CORP.
                                           2004 FORM 10-K ANNUAL REPORT
                                     For the Fiscal Year Ended March 31, 2004

                                                 TABLE OF CONTENTS

                                                                            Page


                                                      PART I

Item 1.
Business....................................................................  3
Item 2.
Properties...................................................................10
Item 3.       Legal
Proceedings..................................................................19
Item 4.       Submission of Matters to a Vote of Security
Holders..................................................19
Item 4(a).    Executive Officers and Managers of the
Company.......................................................20

                                                      PART II

Item 5.       Market for the Company's Common Stock and Related Stockholders'
Matters..............................21
Item 6.       Selected Financial
Data........................................................................23
Item 7.       Management's Discussion and Analysis of Financial Condition
              and Results of
Operations...................................................................24
Item 7(a).    Quantitative and Qualitative Disclosures About Market
Risk...........................................35
Item 8.       Financial Statements and Supplementary
Data..........................................................36
Item 9.       Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.................60
Item 9(a).    Controls and
Procedures...................................................................60

                                                     PART III

Item 10.      Directors and Executive Officers of the
Registrant...................................................60
Item 11.      Executive
Compensation.................................................................61
Item 12.      Security Ownership of Certain Beneficial Owners and
Management.......................................61
Item 13.      Certain Relationships and Related
Transactions.......................................................61
Item 14.      Principal Accounting Fees and
Services...............................................................61

                                                      PART IV

Item 15.      Exhibits, Financial Statement Schedules and Reports on Form
8-K......................................62

Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995.

The matters discussed in this report on Form 10-K, when not historical  matters,
are forward-looking  statements that involve a number of risks and uncertainties
that could cause actual results to differ  materially  from  projected  results.
Such  factors  include,   among  others,   the  speculative  nature  of  mineral
exploration,  commodity prices, production and reserve estimates,  environmental
and governmental regulations,  availability of financing,  force majeure events,
and other risk factors as described  from time to time in the Company's  filings
with the  Securities and Exchange  Commission.  Many of these factors are beyond
the Company's ability to control or predict. The Company disclaims any intent or
obligation  to update  its  forward-looking  statements,  whether as a result of
receiving new information, the occurrence of future events, or otherwise.


<PAGE>


                                                      PART I


Item 1.  Business

General

Commerce Group Corp. ("Commerce," the "Company," and/or the "Registrant") is the
only precious  metals company that has produced gold in the past twenty years in
the Republic of El Salvador, Central America. Furthermore,  since 1968, Commerce
has been operative in the exploration, exploitation, development, and production
of precious  metals in El  Salvador.  Its gold ore  reserves  exceed 1.5 million
ounces,  which, in turn,  translate to .066 ounces of gold for each common share
issued and outstanding as of March 31, 2004. Commerce's objectives are to obtain
a sufficient  amount of funds to expand its San Cristobal  Mill and Plant and to
commence an open-pit, heap-leach operation to produce gold at a profit. Commerce
simultaneously continues to seek a compatible acquisition or merger,  preferably
a business in the precious  metals field, or an endeavor in which synergism will
prevail. This combination should enhance the value of Commerce's common shares.

Commerce  has been a  Wisconsin-chartered  corporation  since its merger  from a
State of Delaware  corporation on April 1, 1999, and its corporate  headquarters
are based in  Milwaukee,  Wisconsin.  It was  organized  in 1962 and its  common
shares have been  publicly  traded since 1968.  The  Company's  shares have been
trading on the Over the Counter  Bulletin Board (OTCBB) under the Symbol CGCO.OB
since May 5, 1999. The Company  presently is in the business of precious  metals
mining.

Precious Metal Mining

Commerce  continues  to  be  engaged  in  the  exploration,   exploitation,  and
development  of gold and silver mines in the  Republic of El  Salvador,  Central
America,  through its Commerce/Sanseb Joint Venture ("Joint Venture").  Commerce
holds a nearly 100%  interest in the Joint  Venture which is the operator of the
San Sebastian Gold Mine ("SSGM").

Commerce's objective is to enhance the value of its shares by realizing profits,
cash flow, and by increasing its gold ore reserves.  This may be achieved by its
continuing  to be a low-cost gold  producer,  by  increasing  production  and by
expanding its gold ore  reserves.  Commerce has an  opportunity  to increase its
gold ore reserves since on March 3, 2003, it received the New San Sebastian Gold
Mine Exploration Concession/License hereinafter identified as the "New SSGM." It
is currently  exploring  this  42-square  kilometer  area,  which includes three
formerly-operated mines and encompasses the SSGM.

Commerce's  current  goal  is to  secure  sufficient  capital  to  increase  its
production  of gold to  113,000  ounces per year and to  simultaneously  develop
additional  gold ore  reserves.  The Company  expects to increase  production by
developing  an  open-pit,  heap-leach  operation  on  site  at the  SSGM  and by
acquiring additional mill and related equipment which will increase the capacity
of the  processing of its higher grade virgin ore at the San Cristobal  Mill and
Plant ("SCMP"). The heap-leach operation should have the capability of producing
(through  processing a higher volume of gold ore)  significantly  more gold than
could be produced at the SCMP,  which has a present  capacity of processing  200
tons of gold  ore  per  day.  Commerce  will  also  continue  to  explore  areas
contiguous to the SSGM site, and it also is planning drill programs at its other
potential mining prospects.




Operations

On December 31,  1999,  the Joint  Venture  decided to  temporarily  suspend its
processing  of gold ore at its SCMP until such time as it has adequate  funds to
retrofit,  restore,  rehabilitate,  and  expand  its  mill  and  plant.  A major
overhauling  is needed to preserve the integrity of the  equipment.  The initial
resumption of producing  gold was with the SCMP used equipment the Joint Venture
purchased  on February 23, 1993.  Even though the Joint  Venture has  maintained
this mill and plant on a continuous basis,  certain basic structural  components
are worn out and need to be replaced, retrofitted or overhauled. Another concern
at that time was the  substantial  decline  in the world  market  price of gold.
Concurrent with the decision to suspend processing gold ore was the awareness to
increase   efficiency  by  expanding  the  SCMP  facilities  from  the  existing
200-ton-per-day  capacity to a  500-ton-per-day  operation.  From March 31, 1995
through  December  31, 1999 when  production  was  suspended,  22,710  ounces of
bullion  containing  13,305  ounces  of gold and 4,667  ounces  of  silver  were
produced at the SSGM and then sold at the respective current world market price.

There are  approximately  1.5 million  ounces of proven and  estimated  gold ore
reserves at the SSGM.  Although the financial statement periods presented herein
reflect that the SSGM is the only one of the Company's  mining  properties which
has generated  revenues,  there are strong  indications  of commercial  gold ore
present at the other gold mine sites.

At  the  current  stage  of  the  exploration  and  development,  the  Company's
geologists have defined the following gold reserves:
<TABLE>
<CAPTION>

                                     Ounces
                                                                          ------------------------------
                                          Tons          Average Grade         Contained      Probable      Total
San Sebastian Gold Mine
(a) Virgin ore, dump waste
<S>                                      <C>                <C>               <C>                          <C>
      material and tailings              14,404,096         0.081             1,166,732                    1,166,732
(b) Stope fill (estimated)                1,000,000         0.340              ________       340,000        340,000
                                      --  ---------                                           -------  ---   -------
                                         15,404,096                           1,166,732       340,000      1,506,732
</TABLE>

The  anticipated  recovery for processing via the SCMP will range from 85% to
95% and for heap leaching from 65% to
70%.

As of March 31,  2004,  the total  investment,  including  interest  and holding
costs,  in the El Salvador  mining  projects by  Commerce,  three of  Commerce's
subsidiaries, Sanseb, and the Joint Venture amounted to $88,242,656.

SSGM Joint Venture Arrangements

Commerce  acquired 82 1/2% of the  authorized  and issued  common  shares of San
Sebastian Gold Mines, Inc. ("Sanseb"),  a Nevada corporation formed on September
4, 1968. The balance of Sanseb's shares are held by approximately  200 unrelated
shareholders.  From 1969 forward, Commerce has provided substantially all of the
capital required to develop a mining operation at the SSGM, to fund exploration,
and to acquire and refurbish the SCMP.

On  September  22,  1987,  Commerce  and  Sanseb  entered  into a joint  venture
agreement (named the  "Commerce/Sanseb  Joint Venture" and sometimes referred to
herein as the "Joint  Venture") to formalize the  relationship  between Commerce
and Sanseb with respect to the mining venture and to divide  profits.  The terms
of this  agreement  authorize  Commerce  to  supervise  and  control  all of the
business  affairs  of the Joint  Venture.  Under this  agreement  90% of the net
pre-tax  profits of the Joint  Venture will be  distributed  to Commerce and ten
percent to Sanseb,  and  because  Commerce  owns 82 1/2% of the  authorized  and
issued  shares of Sanseb,  Commerce  in effect has an over 98%  interest  in the
activities of the Joint Venture. In order to maintain current accounting between
Commerce and Sanseb, the interest charges to Sanseb on advances made by Commerce
are kept separately.  Therefore,  when profits are earned, the interest recorded
will be paid from the cash distributions made to Sanseb.

The Joint  Venture  leases  the SSGM from the  Company's  52%-owned  subsidiary,
Mineral San Sebastian,  S.A. de C.V. ("Misanse"),  an El Salvadoran corporation.
On January 14, 2003,  the Company  entered  into an amended and renewed  20-year
lease agreement with Mineral San Sebastian  Sociedad Anomina de Capital Variable
(Misanse)  pursuant  to the  approval of the  Misanse  shareholders  and Misanse
directors  at a meeting  held on January 12,  2003.  The renewed  lease is for a
period of time commencing and coinciding with the date that the Company received
its Renewed San Sebastian Gold Mine Exploitation Concession/License, hereinafter
identified as the "Renewed SSGM," from the Ministry of Economy's  Director of El
Salvador  Department of Hydrocarbons and Mines (DHM). The lease is automatically
extendible  for one or more equal  periods.  The Company will pay to Misanse for
the rental of this real  estate the sum of five  percent of the net sales of the
gold and silver produced from this real estate, however, the payment will not be
less than  $343.00  per month.  The  Company  has the right to assign this lease
without  prior  notice or  permission  from  Misanse.  This  lease is pledged as
collateral for loans made to related parties (Note 7).

The Joint  Venture is registered as an operating  entity to do business in the
 State of  Wisconsin,  U.S.A.  and in
the  Republic  of El  Salvador,  Central  America.  The Joint  Venture
Agreement  authorizes  Commerce  to execute
agreements on behalf of the Joint Venture.

Organizational Structure and Mining Projects

The percentage of ownership of the Joint Venture and the Company's  subsidiaries
are shown below and are included in the consolidated financial statements of the
Company.  All  significant  intercompany  balances  and  transactions  have been
eliminated.

<TABLE>
<CAPTION>
                                                                                   Charter/Joint Venture
                                                            % Ownership            Place            Date
<S>                       <C>                                    <C>                           <C>   <C>
Homespan Realty Co., Inc. ("Homespan")                           100.0        Wisconsin        02/12/1959
Mineral San Sebastian, S.A. de C.V.  ("Misanse")                   52.0       El Salvador      05/08/1960
Ecomm Group Inc. ("Ecomm")                                       100.0        Wisconsin        06/24/1974
San Luis Estates, Inc. ("SLE")                                   100.0        Colorado         11/09/1970
San Sebastian Gold Mines, Inc. ("Sanseb")                          82.5       Nevada           09/04/1968
Universal Developers, Inc.  ("UDI")                              100.0        Wisconsin        09/28/1964
Commerce/Sanseb Joint Venture ("Joint Venture")                    90.0       Wisconsin  & El  09/22/1987
                                                                              Salvador
</TABLE>

Commerce was originally formed as a Wisconsin corporation  (September 14, 1962).
It then merged into a Delaware corporation on July 26, 1971 and on April 1, 1999
it merged  back into a  Wisconsin  corporation.  It owns 52% of  Misanse,  an El
Salvadoran corporation that was formed on May 8, 1960, reinstated on January 25,
1975 and  reincorporated on October 22, 1993.  Commerce also owns 82 1/2% of the
San  Sebastian  Gold  Mines,  Inc.  (SSGM)  which  was  chartered  as  a  Nevada
corporation on September 4, 1968.  Misanse  previously  had a mining  concession
with the government of El Salvador and was the owner of the SSGM real estate. At
that time,  Misanse had assigned the mining  concession to Commerce  Group Corp.
and San Sebastian Gold Mines,  Inc., the mining operator formed on September 22,
1987 and known as the Commerce/Sanseb  Joint Venture (Joint Venture).  The Joint
Venture  operates the SCMP (the gold  processing  plant acquired on February 23,
1993)  and has  conducted  exploration  and  exploitation  at the  following  El
Salvador gold mines:  SSGM (since  October  1968),  San  Felipe-El  Potosi (from
September 1993 through  November 1999) and its extension  Capulin (from May 1995
through November 1999); Modesto (from August 1993 through July 1997); Hormiguero
(from September 1993 through 1998) and Montemayor  (from March 1995 through July
1997).

Currently the Joint Venture is performing  exploration  on the La Lola Mine, the
Santa Lucia Mine and the Tabanco Mine, which are included in the New SSGM.

The  Government of El Salvador has issued the Modesto and San  Felipe-El  Potosi
mining concessions to others.  Commerce's attorneys have challenged the legality
of the issuance of these  concessions.  Commerce owns properties  believed to be
crucial  to the  Modesto  Mine and it holds  leases to the key  property  of the
Montemayor  Mine.  It plans to apply for  concessions  on the  property  it owns
(Modesto) and on the property that it leases  (Montemayor).  It also has a lease
agreement  with the owners of the San  Felipe-El  Potosi Mine.  Although the sub
surface  rights belong to the  Government of El Salvador,  access to the surface
rights must be obtained from the owner.

All of the mines  mentioned  were  formerly in  production  and did produce gold
and/or  silver.  In  addition  to the  channel  trenching,  test pit holes,  and
underground  adit  openings,  the Joint  Venture  has  acquired  its own diamond
drilling  rig  and  has  contracted  with  others  to  explore  in  depth,   the
above-described  potential targets.  All of the mining properties have promising
geologic prospects,  alterations, and historical records that bear evidence that
all have been mined and produced gold on a commercial basis in the past.

World Gold Market Price, Customers and Competition

Since the Joint Venture was in operation and produced gold on a curbed  start-up
basis, its revenues,  profitability and cash flow were greatly influenced by the
world market price of gold. The gold world market price is generally  influenced
by basic supply and demand  fundamentals.  It is  unpredictable,  volatile,  can
fluctuate  widely and is  affected  by  numerous  factors  beyond the  Company's
control, including, but not limited to, expectations for inflation, the relative
strength of the United  States'  dollar in  relation to other major  currencies,
political and economic conditions,  central bank sales or purchases,  inflation,
production costs in major gold-producing  regions, and other factors. The supply
and demand for gold can also greatly  affect the price of gold.  The Company has
not and does not expect in the foreseeable  future to engage in hedging or other
similar  transactions  to minimize  the risk of  fluctuations  in gold prices or
currencies.  The  Company's  present and past practice has been to sell its gold
and  silver at the world  market  spot  prices.  Gold and  silver can be sold on
numerous  markets  throughout  the  world,  and  the  market  price  is  readily
ascertainable  for such precious metals.  There are many worldwide  refiners and
smelters available to refine these precious metals.  Refined gold and silver can
also be sold to a large number of precious metal dealers on a competitive basis.
The Joint  Venture's SCMP operation  which produces dore was refined by and sold
to a refinery located in the United States.

At this time the Joint  Venture  believes  that,  due to its  current  financial
capacity,  it may not be a major  gold  producer  based  on the  size of  larger
existing gold mining  companies.  The Company believes no single  gold-producing
company  could have a large impact to offset  either the price or supply of gold
in the world market. There are many mining entities in the world producing gold.
Many of these  companies  have  substantially  greater  technical  and financial
resources  and larger gold ore reserves than the Company.  The Company  believes
that the expertise of the Joint Venture's experienced key personnel, its ability
to  train  its  employees,  its  low  overhead,  its  gold  ore  resources,  its
accessibility  to the mine,  its  infrastructure,  and its projected low cost of
production  may  allow  it to  compete  effectively  and to  produce  reasonable
profits.


The profitability and viability of the Joint Venture is dependent upon, not only
the price of gold in the world market (which can be unstable), but also upon the
political  stability of El Salvador and the availability of adequate funding for
either the SCMP operation or the SSGM open-pit,  heap-leaching  operation or for
the other exploration projects.

As of this date, inflation,  currency, interest rate fluctuations, and political
instability  have not had a material  impact on the  Company  or its  results of
operations.

Seasonality

Seasonality does not have a material impact on the Company's operations, but the
rainy season in El Salvador (May through November) can curtail production.

Environmental Matters

Since the  Government  of El Salvador  (GOES) has  established  a new Mining Law
effective February 1996, its exploration,  development,  and production programs
are subject to environmental protection.  The GOES has established the Office of
the El Salvador  Ministry of Environment and Natural  Resources (MARN). In order
to comply  with mining law,  the  Company was  required to obtain  environmental
permits.  On October 15, 2002,  an  environmental  permit under MARN  Resolution
474-2002 was issued for the SCMP. On October 21, 2002, an  environmental  permit
under MARN Resolution 493-2002 was issued pertaining to the SSGM.

Environmental  regulations  add to the cost and time  needed  to bring new mines
into  production  and add to operating  and closure  costs for mines  already in
operation.  As  the  Company  places  more  mines  into  production,  the  costs
associated  with regulatory  compliance can be expected to increase.  Such costs
are a normal  cost of doing  business  in the mining  industry,  and may require
significant  capital and  operating  expenditures  in the future.  The Company's
policy is to adhere to the El  Salvador  environmental  standards.  The  Company
cannot  accurately  predict  or  estimate  the  impact  of any  future  laws  or
regulations developed in El Salvador that would affect the Company's operations.

All  operations by the Company  involving the  exploration  or the production of
minerals are subject to existing laws and  regulations  relating to  exploration
procedures,  safety  precautions,   employee  health  and  safety,  air  quality
standards,  pollution of water sources,  waste materials,  odor, noise, dust and
other  environmental   protection   requirements  adopted  by  the  El  Salvador
governmental  authorities.  The Company  was  required to prepare and present to
such  authorities  data  pertaining  to the effect or impact  that any  proposed
exploration  or  production  of  minerals  may have  upon the  environment.  The
requirements  imposed by any such authorities may be costly,  time consuming and
may delay operations. Future legislation and regulations designed to protect the
environment, as well as future interpretations of existing laws and regulations,
may require  substantial  increases  in  equipment  and  operating  costs to the
Company and delays,  interruptions,  or a termination of operations. The Company
cannot  accurately  predict or  estimate  the impact of any such  future laws or
regulations,  or future interpretations of existing laws and regulations, on its
operations.

El Salvador, Central America Information Sources

The  most  current  information  about  El  Salvador  can be  obtained  from the
following sources:

1.   General    information   can   be   obtained    through   the   Internet
 from   the   following    websites:
     http://www.usinfo.org.sv/newsite/eng/irc/svlinks.html and
http://www.dirla.com/elsalvador2.html.

2.   The U.S. Embassy in El Salvador can also be contacted at Final Boulevard
Santa Elena Sur,  Urbanizacion  Santa
     Elena, Antiguo Cuscatlan,  La Libertad,  El Salvador,  telephone
(011) 503-278-4444 and fax (011) 503-278-6011
     or at its website:  http://elsalvador.usembassy.gov/consular2.

Operations, Other Than Mining

Commerce  independently  and  through  its  partially  and  wholly-owned
subsidiaries  conducted  other  business
activities,  which at  present,  most  are  dormant.  Previous  operations
 consisted  of the  following:  (1) land
acquisition and real estate development through its wholly-owned  subsidiaries,
  San Luis Estates, Inc. ("SLE") and
Universal  Developers,  Inc. ("UDI"); (2) real estate sales, through its
wholly-owned  subsidiary,  Homespan Realty
Co.,  Inc.  ("Homespan");  and (3)  advertising  and various  businesses,
including  Internet-related  businesses,
through its subsidiary, Ecomm Group Inc. ("Ecomm").

Land Acquisition, Development, Ownership and Real Estate Sales

During the past years, the Company has  substantially  diminished its activities
in the business of real estate  development  conducted  principally  through its
subsidiaries  San Luis  Estates,  Inc.  ("SLE"),  a  Colorado  corporation,  and
Universal  Developers,  Inc. ("UDI"), a Wisconsin  corporation.  At present, all
activities have ceased.

Misanse, the Company's majority-owned subsidiary (52%) owns the SSGM real estate
consisting  of   approximately   1,470  acres.   This  real  estate  is  located
approximately  two and  one-half  miles  northwest  of the city of Santa Rosa de
Lima, off of the Pan American Highway (a four-lane newly  constructed  highway),
about 108 miles southeast of the capital city of San Salvador, El Salvador,  and
is about 11 miles west from the border of the  Country of  Honduras.  It is also
about 26 miles from the city of La Union which has railroad and port facilities.
The Company, on January 14, 2003, entered into a long term lease arrangement.

The Company also leases  approximately  166 acres of real estate on which it has
its SCMP and plans to process ore on this site.  These facilities are located on
the Pan American Highway, near the City of El Divisadero.

The Company owns  approximately  63 acres of land on the Modesto Mine site which
is located due north of the city of Paisnal and  approximately 19 miles north of
San  Salvador,  the capital city of El Salvador.  This real estate is pledged as
collateral for funds advanced to the Company.  It also leases  approximately 175
acres of land  considered  to be the  main  part of the  Montemayor  Mine in the
Department of Morazan.

The Joint Venture entered into a lease  agreement with the San Felipe-El  Potosi
Cooperative  ("Cooperative") of the city of Potosi, El Salvador on July 6, 1993,
to lease the real estate encompassing the San Felipe-El Potosi Mine for a period
of 30 years and with an option  to renew the lease for an  additional  25 years,
for the purpose of mining and extracting minerals.

Reference is made to "Item 2.  Properties," for additional information.

Homespan, the local real estate marketing subsidiary of the Company is presently
inactive.  It has no  significant  activity and is not material to the Company's
operation.




Internet Business and Advertising

The  Company  owns 100% of the  outstanding  common  stock of Ecomm  Group  Inc.
("Ecomm"),  a Wisconsin  corporation.  The Company,  in order to  diversify  its
business  activities,  on  January  29,  1999,  announced  its plans to have its
wholly-owned  subsidiary,  Ecomm,  enter into the web portal  business.  Ecomm's
strategy  was to  attempt  to  acquire  or to "roll up"  Internet  websites  and
businesses and  consolidate  them into a web portal.  The Company's  attempts to
acquire Internet-related  businesses have not been successful,  therefore, there
are no activities.

Employees

As of March 31, 2004,  the Company and its  wholly-owned  subsidiaries  employed
between 35 and 45 persons, which number may adjust seasonally.  The Company also
employs up to four persons, including part-time help, in the United States. None
of the Company's employees are covered by collective bargaining agreements.

Patents, Trademarks, Licenses, Franchises, Concessions & Government Contracts

Other than concessions,  licenses and interests in mining properties  granted by
governmental  authorities and private  landowners,  the Company does not own any
material patents, trademarks, licenses, franchises or concessions.

Significant Customers

The Company presently has no individual  significant customers in which the loss
of one or more would have an adverse  effect on any segment of its operations or
from whom the Company  has  received  more than ten percent of its  consolidated
revenues,  except for the sale of gold when the Joint Venture is in  production.
The gold in dore form is refined and then sold at the world market spot price to
a refinery located in the United States.

Miscellaneous

Backlog  orders at this time are not  significant to either the Company's or its
majority-owned subsidiaries' areas of operations, or at this time is any portion
of their  operations  subject to  renegotiation  of profits  or  termination  of
contracts at the election of the United States' Government.

At this time,  neither the Company nor its majority-owned  subsidiaries  conduct
any material  research and development  activities,  except as indicated in this
report  with  respect  to  the  Joint   Venture  and  its  mining   exploration,
exploitation,  and development programs in the Republic of El Salvador,  Central
America.

The Company believes that the federal, state and local provisions regulating the
discharge of materials into the environment should not have a substantial effect
on the capital expenditures,  earnings or competitive position of the Company or
any of its  majority-owned  subsidiaries as the Company does not have any mining
activity in the United States.



<PAGE>



Item 2.  Properties


Mining Properties

The table below provides a summary of the most significant  mining properties in
which  Commerce  Group Corp.  or the Joint  Venture has an interest.  All of the
properties  are located in the Republic of El Salvador,  Central  America.  More
detailed information  regarding each of these properties is provided in the text
that follows.
<TABLE>
<CAPTION>

                                                  Date                    Amount of Funds to Make    Date Mine will be Operational
Property Description   Nature of Interest   Interest    Cost of Interest         Property Operational
--------------------  ------------------  ----------------  --------------------
                                                 was Acquired
                                                  ------------
<C>                                                                        <C>       <C>
1.   San   Sebastian    Gold   Mine
Mineral  concession   consisting      1968      5% of the gross  precious  This is  dependent on the  It  was  in  operation  on  a
     located   two   and   one-half
 of   100%   ownership   of   the                metal  proceeds or $343 a  scale  of   production curbed  production basis from
     miles  northwest  of the  city
 precious  metals  extracted from                month     whichever    is  that  management  decides  03/31/95 until December  31,
     of Santa  Rosa de Lima and the
 this mine.                                      higher.          to  perform.  The  amount  1999   when   operations   were
     Pan American Highway.                                               of  investment  could  be  suspended  due to the  need  to
                                                                         from $5  million  to $100  overhaul,  repair,  restore and
                                                                              million.                   expand the SCMP facilities.

2.   San  Felipe-El  Potosi/Capulin
El Salvador  legal counsel is in    07/06/93    5% of the gross  precious  Undetermined    until   a  Undetermined.
     Mine  located near the city of
 the    process   of    reviewing                metal proceeds.            preliminary      drilling
     Potosi,  18 miles northwest of
alternatives   to   obtain   the                                           program   is   completed;
     the city of San Miguel.         mineral concession.                                          estimated     cost     of
                                                                                                        drilling is $2 million.

3.   Hormiguero  Mine  located five
Ownership of the tailings.           09/93      The  surface  use of land  Undetermined    until   a  Undetermined.
     miles  southeast  of  the  San                                           (rent)     is    to    be  preliminary      drilling
     Cristobal  Mill and Plant near                                    negotiated.                program   is   completed;
     the city of Comacaron.                                                                        estimated     cost     of
                                                                                                   drilling  is $2  million.
                                                                                                      Mine   surface    channel
                                                                                                        trenching     and    adit
                                                                                                          cleaning     should    be
                                                                                                          completed   to  determine
                                                                                                                drilling  cost.

4.   Modesto  Mine located near the  Application  is to be  submitted  09/93 On the Company-owned Undetermined until a Undetermined.
     city of  Paisnal  and about 19  for  a  mineral   concession  on                land  it  appears  as if preliminary drilling
     miles  north of San  Salvador,  the  real  estate  owned  by the                this  will be an  program   is   completed;
     the capital city.               Company   to  own  100%  of  the                underground operation. estimated  cost     of
                                     precious  metals  extracted from                Therefore, no cost for drilling is $2 million.
                                     the  real  estate  owned  by the                interest.
                                     Company.

5.   Montemayor  Mine located about  Application  is to be  submitted  07/95 It appears that this Undetermined until a Undetermined.
     14  miles  northeast  of  SCMP  for a mineral  concession on the         will  be  an  underground  preliminary      drilling
     and about six miles  northwest  land  leased by the  Company  to          mine,  therefore  current  program   is   completed;
     of SSGM.                        own 100% of the precious  metals          leases  will  have  to be  estimated     cost     of
                                     extracted  from  the  areas  the           renegotiated          and  drilling is $2 million.
                                     Company leases.                             extended.

6.   San  Cristobal  Mill and Plant
 Mill  and  Plant  owned by Joint   Equipment    Equipment  purchased  and  To  expand   the   plant,  Curbed production commenced
     located  off the Pan  American
 Venture.   The  real  estate  is    02/23/93    extensive    retrofitting  including    a   crushing  March 1995; expansion program
     Highway  west  of the  city of
 owned  by  an   agency   of  the      and       was and  continues  to be  system to a  capacity  of  in     progress.  Operations
     El Divisadero.
   Government of El Salvador.         thereafter   performed.            The  500  tons  per  day; an suspended on 12/31/99 until
                                                      Lease depreciated investment estimated sum of up to the existing equipment is
                                                      11/12/93 through 03/31/04 is $3 million may be overhauled, repaired, restored
                                                            $4,288,953.  required,  all  dependent  and   expansion   of  the  SCMP
                                                                         whether   new   or   used  facilities are completed,  and,
                                                                         equipment     will     be  dependent on the price of gold.
                                                                                                                purchased.

7.   New San  Sebastian  Gold  Mine  Exploration   concession  issued     02/03  Undetermined  as  Undetermined until Undetermined.
     Exploration                     by   the    Government   of   El            negotiations will be  exploration     at     an
     Concession/License              Salvador  for 100%  ownership of            made  with  the surface estimated   cost   of  $2
     consisting    of   42   square  the precious metals.                        rights' owners.           million is completed.
     kilometers.

</TABLE>

<PAGE>



35


                                                                          35

The San Sebastian Gold Mine

General Location and Accessibility

The SSGM is situated on a mountainous  tract of land consisting of approximately
1,470 acres of explored and  unexplored  mining  prospects.  The SSGM is located
approximately two and one-half miles off of the Pan American Highway,  northwest
of the city of Santa Rosa de Lima in the  Department  of La Union,  El Salvador.
The tract is typical of the numerous volcanic  mountains of the coastal range of
southeastern El Salvador.  The topography is mountainous with elevations ranging
from 300 to 1,500 feet  above sea  level.  The  mountain  slopes are steep,  the
gulches are well defined, and the drainage is excellent.

There is good roadway access to the SSGM site. Most of the reconstruction of the
Pan American Highway from two lanes to four lanes (from the city of San Salvador
to the  Honduran  border)  has been  completed.  The city of Santa  Rosa de Lima
(approximately  three  miles from the SSGM) is one of the  larger  cities in the
Eastern Zone.  The SSGM is  approximately  30 miles from the city of San Miguel,
which is El Salvador's third largest city, and approximately 108 miles southeast
of El Salvador's capital city, San Salvador. SSGM is also approximately 26 miles
from the city of La Union which has port and railroad  facilities.  Major United
States'  commercial  airlines  provide daily  scheduled  flights to the Comalapa
Airport which is located on the outskirts of the city of San Salvador.

SSGM Reserves and Operation

GOLD ORE RESERVES (03/31/03)
<TABLE>
<CAPTION>
                                                                                             Contained
                                                           Tons      Average Grade         Gold Ounces(1)
<S>                                                   <C>                  <C>               <C>
Ore - virgin                                          14,404,096           0.081             1,166,732
Stope fill (estimated)                                  1,000,000          0.340                340,000
                                                    --  ---------                        ---    -------
   Totals                                             15,404,096                             1,506,732

(1)   The estimated recoverable ounces of gold by processing: SCMP, 85% to 95%; heap leach, 65% to 70%.
</TABLE>

The tailings,  dump material,  and stope fill at the SSGM are the by-products of
past mining  operations.  The  tailings are the residue of higher grade ore once
milled and processed to recover the then economically  feasible fraction of gold
present in the material. Most of the tailings, except the lower grade, have been
processed.  The dump  material is actually  gold ore which has been mined in the
search for higher  grades of gold ore and piled to the side of past  excavations
as it was  considered  at that  time to be too low of a grade of ore to  process
economically;  however, it was reserved for future processing until the price of
gold is at a level to process it  profitably.  The stope fill that is  available
was  in the  past  considered  to be  too  low  of a  grade  of  ore to  process
economically,  therefore  it  was  primarily  used  to  fill  the  voids  in the
underground  workings to accommodate  the extraction of the higher grade of gold
ore in the past SSGM mining activities.  Virgin gold ore, as the term is used in
this  report,  is gold ore which is on the  surface and  readily  available  for
processing; it also includes the undeveloped underground gold ore.




Virgin  gold ore at the SSGM  represents  the  majority  of the  material  (14.4
million tons, including the dump waste material) in the Company's reserves.  The
Company  plans to use an open-pit  mining  method and will truck the lower grade
gold ore to one or more  heap-leaching  pads developed at the SSGM site. The use
of  open-pit  mining and  heap-leaching  techniques  will  enable the Company to
process a higher volume of low grade gold ore than can be processed at the SCMP.
The Company  plans to continue to operate the SCMP after  developing a leach-pad
operation  at the SSGM,  using the  facility to process the higher  grade ore it
encounters  in the course of mining at the SSGM.  The milling  operation  at the
SCMP is expected to return a higher rate of gold  recovery  than can be expected
from heap-leaching techniques.

Approximately  960,000  tons of dump  material  present at the SSGM  site,  with
grades  ranging from 0.082 to 0.178 ounces of gold per ton,  have been  combined
with the virgin ore reserves. An analysis of the underground stope fill material
was made by the Company's  consulting  geologist  who has  confirmed  that about
seven  percent  of the stope  fill had been  removed  and  processed  during the
1973-1978  period.  The grade of the stope fill averages 0.34 ounces of gold per
ton. It is estimated  that there are about one million tons  available  for SCMP
treatment  from the  underground  operations.  It is  necessary  to  remove  the
material  which has caved in the adits to reach  the  stope  fill  areas,  or it
eventually will be encountered in the open-pit operations.

All residue from the  contemplated  operations  will be stockpiled for potential
future processing dependent upon the price of gold,  improvements in technology,
and the depletion of higher grade material.

Misanse Mining Lease

The Company  (previously through the Joint Venture) leases the SSGM from Mineral
San  Sebastian,  S.A. de C.V.  ("Misanse"),  an El Salvadoran  corporation.  The
Company owns 52% of the total of Misanse's  issued and outstanding  shares.  The
balance of the shares are owned by about 100 El Salvador,  Central  American and
United  States'  citizens.  (Reference  is  made  to  Note  7 of  the  financial
statements for related party interests.)

SSGM Mining Lease

On January 14,  2003,  the  Company  entered  into an amended and renewed  lease
agreement  with  Mineral  San  Sebastian  Sociedad  Anomina de Capital  Variable
(Misanse) pursuant to the approval of the Misanse  shareholders and directors at
a  shareholders'  meeting and  thereafter  at a directors'  meeting both held on
January 12, 2003. The renewed lease is for a period to coincide with the term of
its Renewed  SSGM,  which it received on August 29, 2003 from the DHM. The lease
is automatically  extendible for one or more equal periods. The Company will pay
to Misanse for the rental of this real estate the sum of five percent of the net
sales of the gold and  silver  produced  from this  real  estate,  however,  the
payment  will not be less than  $343.00 per month.  The Company has the right to
assign this lease without prior notice or permission from Misanse. This lease is
pledged as collateral for loans made to related parties (Note 7).

Misanse Mineral Concession/License-Government of El Salvador

In El Salvador, the rights to minerals below the sub-surface are vested with the
government.  Mineral rights are granted by the government through concessions or
licenses.

On January 27, 1987, the  Government of El Salvador  granted a right to the SSGM
mining concession ("concession") to Misanse which was subject to the performance
of the El Salvador  Mining Law  requirements.  These rights were  simultaneously
assigned to the Joint Venture.

On July 23,  1987,  the  Government  of El  Salvador  delivered  and  granted to
Misanse,  possession of the mining concession.  This is the right to extract and
export minerals for a term of 25 years (plus a 25-year renewal option) beginning
on the first day of production  from the real estate which  encompasses the SSGM
owned by Misanse. Misanse assigned this concession to the Joint Venture.

Effective  February  1996,  the  Government  of El  Salvador  passed a law which
required  mining  companies  to pay to it three  percent  of its gross gold sale
receipts  and an  additional  one  percent  is to be  paid  to  the El  Salvador
municipality  which has jurisdiction of the mine site. As of July 2001, a series
of  revisions  to the El  Salvador  Mining  Law offer to make  exploration  more
economical. The principal change is that the fee has been reduced to two percent
of the gross gold receipts.

Renewed San Sebastian Gold Mine Exploitation Concession/License (Renewed SSGM)
 - approximately 1.2306 square kilometers,  Department of La Union, El
Salvador, Central America

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. An inspection by the DHM was made. 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 a  twenty-year  Renewed  SSGM which was dated August 18, 2003.
This Renewed SSGM  replaces the  collateral  that the same parties held with the
previous concession.

New SSGM Exploration Concession/License (New SSGM) - approximately 40.7694
 square kilometers

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
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.  Besides the San Sebastian  Gold Mine,  the  following  three other
formerly  operative  gold and silver  mines  included  in the New SSGM are being
explored: the La Lola Mine, the Santa Lucia Mine, and the Tabanco Mine.


Nueva Esparta Exploration Concession/License (Nueva Esparta) - 45 square
 kilometers

On or about October 20, 2002, the Company filed an application  with the DHM for
the Nueva Esparta,  which consists of 45 square kilometers north and adjacent to
the New SSGM. 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 Grande Mine, the Las Pinas
Mine, the Oro Mine,  the Montemayor  Mine, the Banadero Mine, the Carrizal Mine,
the La Joya  Mine  and the  Copetillo  Mine.  The  application  was  denied  and
presently is being appealed by the Company.

SSGM Current Status

The Company,  through its Joint Venture is conducting the following  activities:
It is in the exploration,  exploitation,  development and pre-production  mining
stage  which  consists of  completing  its survey,  mapping,  site  preparation,
infrastructure,  construction,  planning,  and the  performance of the auxiliary
work needed to resume gold production at the SSGM site.  Presently,  the Company
is seeking funding to purchase equipment, to purchase inventory,  and to use for
working capital for its on-site proposed open-pit,  heap-leaching  operation. In
addition,   the  Company  is  planning  its  strategies  for  the  New  SSGM  in
anticipation of increasing its gold ore reserves.

The Company's main objective and plan, through the Joint Venture,  is to operate
a moderate tonnage, low-grade, open-pit, heap-leaching operation to produce gold
on its SSGM site.  Dependent on the  funding,  the grade of ore, and the tonnage
processed,  it  anticipates  producing  more than 40,000 ounces of gold from its
open-pit,  heap-leaching operation during the first twelve full operating months
and then gradually increasing the annual production of gold to 113,000 ounces.

Proposed SSGM Open-Pit, Heap-Leaching Operation

The Joint Venture has placed the SCMP into a curbed production operation. It now
intends  to  obtain  a sum of $9  million  or  more  to  commence  an  open-pit,
heap-leaching  operation at the SSGM site.  An  additional $8 million or more is
estimated to be required for the crushing system,  plant, and mining  equipment,
if the Joint Venture were unable to lease this equipment.  After these funds are
obtained,  the Joint Venture intends to start  processing gold ore from its open
pit at a production  level of 2,000 tons per day.  During the second  year,  the
production level plans are to expand production to 3,000 tons per day (the funds
for this  expansion  could be generated  from  profits).  An increase to process
4,000  tons of gold ore per day would  take  place  during  the  third  year and
another  expansion  to  process  6,000  tons  per day  would  take  place at the
beginning of the fifth year;  all funds for this  expansion  should be available
through a combination  of earned  profits,  borrowings,  equity sales,  or other
creative sources.  With the anticipated  production volume, there is more than a
nine-year supply of gold ore as it is believed that a substantial amount of gold
ore can be proven.

The Company's  geologists  have defined a body of ore  consisting of 138 million
tons of gold ore at a grade of 0.025  ounces of gold per ton.  This  reflects  a
potential  of 3.4 million  ounces of gold  (including  the  existing 1.5 million
ounces)  and  about  400,000  ounces  of  silver  from  this  planned  open-pit,
heap-leaching  operation.  It would take about 64 years to process  this body of
gold ore at a production capacity of 6,000 tons per day.


SSGM Ownership of the Property

The San Sebastian Gold Mine real estate consisting of approximately 1,470 acres,
is owned by Misanse, a Salvadoran  corporation.  The Company owns 52% of Misanse
common shares that are issued and outstanding.

Environmental Matters

The  Company's  operations  are subject to  environmental  laws and  regulations
adopted by various  governmental  authorities in the  jurisdictions in which the
Company operates.  Accordingly,  the Company has adopted policies, practices and
procedures  in the areas of  pollution  control,  product  safety,  occupational
health and the  production,  handling,  storage,  use and  disposal of hazardous
materials to prevent material  environmental  or other damage,  and to limit the
financial liability which could result from such events.  However,  some risk of
environmental or other damage is inherent in the business of the Company,  as it
is with other companies engaged in similar businesses.

The DHM  requires  environmental  permits  to be issued in  connection  with the
application  of the Renewed  SSGM.  The  issuance of these  permits is under the
jurisdiction of the El Salvador  Ministry of Environment  and Natural  Resources
Office (MARN).  On October 15, 2002, MARN issued an  environmental  permit under
Resolution  474-2002  for  the  SCMP.  On  October  20,  2002,  MARN  issued  an
environmental permit under Resolution 493-2002 for the Renewed SSGM Exploitation
area.

Environmental  regulations add to the cost and time needed to bring new mines or
mills into  production  and add to operating and closure costs for mines already
in  operation.  As the  Company  places  more mines into  production,  the costs
associated  with regulatory  compliance can be expected to increase.  Such costs
are a normal  cost of doing  business  in the mining  industry,  and may require
significant capital and operating expenditures in the future. The Company cannot
accurately  predict or  estimate  the impact of any future  laws or  regulations
developed in El Salvador that would affect the Company's operations.

All  operations by the Company  involving the  exploration  or the production of
minerals are subject to existing laws and  regulations  relating to  exploration
procedures,  safety  precautions,   employee  health  and  safety,  air  quality
standards,  pollution of water sources,  waste materials,  odor, noise, dust and
other  environmental   protection   requirements  adopted  by  the  El  Salvador
governmental authorities. The Company is required to prepare and present to such
authorities   data  pertaining  to  the  effect  or  impact  that  any  proposed
exploration  or  production  of  minerals  may have  upon the  environment.  The
requirements  imposed by any such authorities may be costly,  time consuming and
may delay operations. Future legislation and regulations designed to protect the
environment, as well as future interpretations of existing laws and regulations,
may require  substantial  increases  in  equipment  and  operating  costs to the
Company and delays,  interruptions,  or a termination of operations. The Company
cannot  accurately  predict or  estimate  the impact of any such  future laws or
regulations,  or future interpretations of existing laws and regulations, on its
operations.




San Felipe-El Potosi Mine ("Potosi") and its extension the El Capulin Mine
("El Capulin")

Potosi Location

The Joint Venture had commenced an  exploration  program on the Potosi  property
which is located approximately 18 miles northwest of the city of San Miguel, the
third largest city in the Republic of El Salvador,  Central America,  on a paved
road 15 miles to the city of  Chapalteque  and then west three miles on a gravel
road to the city of Potosi.  The  historical  records and the  exploration  work
performed by the Company  indicate  that the potential of developing a gold mine
is above average.

Potosi Lease Agreement

The Joint  Venture  entered into a lease  agreement  with the San Felipe  Potosi
Cooperative  ("Cooperative") of the city of Potosi, El Salvador on July 6, 1993,
to lease the real  estate for a period of 30 years,  with an option to renew the
lease for an  additional  25 years,  for the  purpose of mining  and  extracting
minerals.  Although  the Company did not receive a  concession/license  from the
DHM, it is preserving its rights under the lease agreement.

Hormiguero Mine ("Hormiguero")

Hormiguero Location

The Hormiguero is located  approximately  five miles southeast from the SCMP off
of the Pan  American  Highway in the  Departments  of San  Miguel  and  Morazan,
Comacaran  Jurisdiction,  in the Republic of El Salvador,  Central America.  The
Joint  Venture  plans to survey,  map,  plat,  plan and  develop an  exploration
program.

Hormiguero Current Status

The Joint  Venture is planning to develop an  exploration  program on this 5,000
acre site. An application  for  exploration  had been filed on September 6, 1993
with the DHM.  In order to comply  with the El  Salvadoran  Mining  Law  adopted
during  February 1996, an exploration  application  was filed on April 21, 1997.
The Joint Venture has  temporarily  suspended all of its  activities  until such
time as it decides to resume them.

Modesto Mine

Modesto Mine Location

The Modesto Mine is located due north of the town of El Paisnal,  approximately
  19 miles north of the capital city, San Salvador,  in the Republic of
El Salvador, Central America.

Modesto Mine Present Status

On or about  September 2, 1993, the Joint Venture  through one of its employees,
filed an application with the DHM to explore the 4,000 hectares (9,800 acres) of
property known as the Modesto Mine. The  application,  together with the consent
to explore  this area from the  property  owners  owning  more than 25% of total
area,  has been  submitted to the DHM. Also, the Joint Venture had submitted its
original  plan to this  governmental  agency on January 24, 1994,  outlining its
exploration  program.  In order to comply  with the current  mining  regulations
adopted by the Government of El Salvador during February 1996, the Joint Venture
filed an exploration concession application on April 21, 1997.

After  completing  the  necessary  surveying,  mapping and  planning,  the Joint
Venture proceeded to clean and trench the surface and adit vein exposure.  Since
August 1993,  3,084 metric feet of surface channel  trenching  (10,177 feet) and
866 meters  (2,858 feet) of adit  cleaning  were  completed.  In addition,  four
inclines have been excavated for entry. A total of 4,027 fire assay samples were
performed  revealing an average grade of 0.035 ounces per ton. The Joint Venture
suspended  its  exploration  during July 1997 as the  Government  of El Salvador
awarded the  concession of the property to another mining  company.  The Company
believes that it owns the key property,  therefore  permission  from the Company
will be required  before entry can be made by others.  The Joint  Venture,  upon
advice  of  legal  counsel,  intends  to file an  application  for a  concession
(license) on the property it owns.

Montemayor Mine ("Montemayor")

Montemayor Location/Ownership

The Joint  Venture  has  obtained  leases for more than 175 acres of the surface
rights from a number of property  owners which permit the Joint Venture to enter
their  property for the purpose of  exploring,  exploiting  and  developing  the
property and then, if feasible, to mine and extract minerals from this property.
The term of this permission is for an infinite period. The Company believes that
this real estate  contains the "heart" of the mine.  Montemayor is located about
14 miles  northeast of the SCMP,  six miles  northwest of the SSGM and about two
and one-half miles east of the city of San Francisco Gotera in the Department of
Morazan, Republic of El Salvador. Historical records evidence that the potential
for the  Montemayor  to become an  exploration  and  development  gold-producing
prospect is good.

On April  22,  1997,  a current  exploration  concession  was filed  with the El
Salvador  Minister of Economy's office in order to comply with the El Salvadoran
Mining Law adopted in February  1996.  During July 1997, the Minister of Economy
awarded  the  concession  to others.  Since the Joint  Venture has leases on the
surface  of key real  estate,  it cannot be forced to allow  others to operate a
mine on this key part of the property. The concession/license for the Montemayor
Mine is included in the Nueva Esparta application filed on October 20, 2002.

San Cristobal Mill and Plant ("SCMP") Recovery and Processing System

SCMP Location

SCMP is  located  near the city of El  Divisadero  (bordering  the Pan  American
Highway),  and is  approximately  13 miles east of the city of San  Miguel,  the
third largest city in the Republic of El Salvador, Central America.

SCMP Lease Agreement

Although the Joint Venture owns the mill, plant and related  equipment,  it does
not own the land and certain buildings.

On  November  12,  1993,  the  Joint  Venture  entered  into an  agreement  with
Corporacion   Salvadorena   de   Inversiones   ("Corsain"),   an  El  Salvadoran
governmental agency, to lease for a period of ten years, approximately 166 acres
of land and  buildings  on which its gold  processing  mill,  plant and  related
equipment (the SCMP) are located,  and which is  approximately  15 miles west of
the SSGM site. The basic annual lease payment was U.S. $11,500, payable annually
in advance, unless otherwise amended, and subject to an annual increase based on
the annual United States'  inflation rate. As agreed, a security deposit of U.S.
$11,500  was paid on the same date and this  deposit  was  subject to  increases
based on any United States' inflationary rate adjustments.

On April 26, 2004, a three-year  lease,  which includes an automatic  additional
three-year  extension subject to Corsain's  review,  was executed by and between
Corsain and the Company.  This lease is retroactive to November 12, 2003 and the
monthly lease payments are $1,418.51 plus the El Salvadoran added value tax. The
lease is subject to an annual  increase  based on the U.S.  annual  inflationary
rate  adjustments.  The SCMP is strategically  located to process ore from other
mining projects.

SCMP Mill and Plant Process Description

Current Status

The SCMP (a precious metal cyanidation carbon-in-leach system) has a capacity of
processing  up to 200  tons of  virgin  ore per  day.  The  following  units  of
operations are required: crushing, grinding,  thickening,  agitated leaching and
recovery of precious metals via a carbon-in-leach (CIL) system.

The SCMP has been  designed to process up to 500 tons of virgin ore per day. The
SCMP operations were suspended as of December 31, 1999, as the plant, equipment,
and facilities have been place on a care and maintenance  status until such time
as the Company  has  sufficient  funds to complete a major  overhaul in order to
place it into operating condition.

SCMP Project Operating Plan

Current and Anticipated Production Schedule

Preproduction  development,  consisting  primarily  of  expansive  road and site
improvements to the mine and mill sites,  mill equipment  modifications  and the
development  and  hauling of virgin ore has taken  place  during the past years.
Initial  production  was from the SSGM  tailings.  Since  the  SSGM's  tailings'
resource is  exhausted,  virgin gold ore is excavated  from the SSGM surface and
hauled to the SCMP site.

The  other  sources  of gold ore from the SSGM to be used at the SCMP  operation
will be obtained  from the stope fill or higher  grade gold ore after  obtaining
access via the  underground  workings  or from the surface of the main ore body.
This gold ore will have to be crushed and pulverized,  which increases the cost,
but is expected to yield a 90% or higher recovery. The income,  dependent on the
market price of gold from the higher grade and recovery of gold ore, is expected
to be substantially  more than the cost involved,  providing that the world gold
market price does not decline to a level of unprofitability.

The virgin ore and/or  tailings  are  referred to herein as "gold ore." The gold
ore from the SSGM open-pit is loaded onto 20-25 ton dump trucks for transport to
the  SCMP.   Trucks  then  haul  the  gold  ore  on  the  Pan  American  Highway
approximately  15 miles from the SSGM.  Mine employees are  responsible  for the
mining activities including the determination of areas to be excavated, trucking
and loading operations, head sampling and sample analysis.

The gold ore is received at the SCMP where it is weighed,  logged,  and sampled.
Weighing  is  performed  utilizing  a conveyor  belt scale  and/or a truck scale
located on the SCMP site.  The excess gold ore is then unloaded at the SCMP site
and  stockpiled  in an area which was  developed  to allow  storage of more than
50,000 tons.

Environmental Matters

Reference is made to San Sebastian Gold Mine  "Environmental  Matters." The same
information  applies.  On October 15, 2002, an environmental  permit (Resolution
474-2002) was issued to the Company by the Office of the El Salvadoran  Ministry
of Environment and Natural Resources.

The Joint Venture Laboratories (Lab)

The Joint Venture has two  laboratories:  one located at the SCMP facilities and
the other on real  estate  owned by the Company  near the SSGM site.  A total of
78,441  samples of  exploration  fire assays have been logged  through March 31,
2004.  This total does not include the assays that were performed for production
purposes.

Corporate Headquarters

The Company  leases  approximately  4,032  square  feet of office  space for its
corporate  headquarters on the second floor of the building known as the General
Building located at 6001 North 91st Street,  Milwaukee,  Wisconsin, at a monthly
rental charge of $2,789 on a month-to-month  basis. The lessor is General Lumber
& Supply Co., Inc. ("General Lumber"),  a Wisconsin  corporation.  The Company's
President,  Edward L. Machulak,  owns 55% of the common stock of General Lumber.
Edward L.  Machulak  disclaims  any  interest in the  balance of General  Lumber
common stock which is owned by two of Mr. Machulak's  brothers,  his wife, and a
trust  for  the  benefit  of his  children.  In  addition,  the  Company  shares
proportionately  any increase in real property taxes and any increase in general
fire and extended coverage  insurance on the property.  In lieu of cash payment,
the Lessor has agreed to apply the monthly  rental  payments owed to the secured
open-ended, on-demand promissory note(s) due to it.

Item 3.  Legal Proceedings

The Company is not a party to any material legal proceedings.

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

No matters were brought to a vote of security  holders in the last quarter ended
March 31, 2004.













Item 4(a).  Executive Officers and Managers of the Company

Listed below are the names,  ages and  positions of the  executive  officers and
managers of the Company and their  business  experience  during the past five or
more years.  All  officers are elected at the annual  meeting of the  directors,
which is normally held after the annual shareholders' meeting.

<TABLE>
<CAPTION>
                                 Age as of            Executive Offices Held             Period Served
           Name                March 31, 2004            With Company (1)                In Office (2)
           -----               --------------            ----------------                -------------
<S>                                  <C>
Edward L. Machulak                   77          President, Chief Executive,
                                                 Operating and Financial Officer
                                                 Treasurer                          9/14/62 to present
                                                                                    06/78  to present
Edward A. Machulak                   52          Executive Vice President           10/16/92 to present
(Son of the President)                           Secretary                          1/12/87 to present
                                                 Assistant Secretary                4/15/86 to 1/12/87
Luis A. Limay                        62          Project and Mine Manager           10/86 to 1995
                                                 Manager of El Salvador
                                                 Operations                         03/95 to present
</TABLE>

(1)  Neither have there been nor are there any arrangements  nor  understandings
     between any  Executive  Officer and any other person  pursuant to which any
     Executive Officer was elected as an Executive Officer.

(2)  Executive  Officers are elected by the Directors for a term expiring at
the Directors'  Annual  Meeting  and/or hold such  positions  until their
     successors have been elected and have qualified.

Family Relationships

Edward A. Machulak,  presently a Director,  Member of the  Directors'  Executive
Committee,  Director-Emeritus,  Executive Vice President,  and Secretary, is the
son of Edward L. Machulak,  the Company's Chairman of the Board of Directors who
is also a Member of the Directors' Executive Committee, and is the President and
Treasurer of the Company.  Attorney John E. Machulak (son of Edward L. Machulak)
of the law firm of Machulak,  Robertson & Sodos,  S.C. is the legal  counsel for
the Company.

Officers' and Key Management's Experience

The business experience of each of the Directors,  Officers,  and Key Management
is as follows:

Edward L. Machulak has been employed by the Company since  September  1962.  Mr.
Machulak  has served as the  President,  Director,  and Chairman of the Board of
Directors  of the Company  since 1962,  Treasurer  since 1978,  and on March 11,
1991, he was elected as a Member of the Directors' Executive  Committee.  He has
been a member of the Audit  Committee  since February 9, 1998, the date that the
Audit Committee was formed, and has been a  Director-Emeritus  since December 5,
1979.






He is a Director and the President or Officer of: Homespan Realty Co., Inc.; San
Luis Estates,  Inc.; San Sebastian Gold Mines,  Inc.; and Universal  Developers,
Inc. He is the Secretary and Treasurer of Ecomm Group Inc. He is the  authorized
representative of the Commerce/Sanseb  Joint Venture. He is a Director,  was the
Treasurer,  and as of January 12,  2003,  was elected  President  of Mineral San
Sebastian  S.A.  de C.V.  Also he is  involved  in various  capacities  with the
following companies:  General Lumber & Supply Co., Inc.,  Director;  Edjo, Ltd.,
Director and Secretary; and Landpak, Inc., Director and Secretary.

Edward A.  Machulak  (son of Edward L.  Machulak)  is a  Director  and holds the
following  Company  positions:  Director as of October 28, 1985; a member of the
Directors'  Executive  Committee as of March 11, 1991;  Director-Emeritus  since
October 28, 2000;  Executive Vice President as of October 16, 1992; Secretary as
of January 12,  1987;  and he was the  Assistant  Secretary  from April 15, 1986
through January 12, 1987.

He is also a Director,  Vice  President and Secretary of:  Homespan  Realty
Co., Inc. and San Luis Estates,  Inc.;  and is a Director and Secretary of
San Sebastian Gold Mines, Inc.  He has been a Director and Secretary of Ecomm
 Group Inc. and was elected President on May 17, 2000.

His  business  experience  is as follows:  Director and  Corporate  Secretary of
General  Lumber & Supply Co.,  Inc., a building  material  wholesale  and retail
distribution  center from April 1, 1970 to November 1983; Director and President
of Gamco,  Inc., a marketing  and  advertising  company,  from  November 1983 to
present; Director and President of Circular Marketing,  Inc., an advertising and
marketing  business,  from March 1986 to  present;  Director  and  President  of
MacPak, an Internet  developer from September 26, 1996 to present;  Director and
President of Edjo, Ltd., a company involved in the development,  subdividing and
sale of land  and  real  estate  from  June 7,  1973 to  present;  Director  and
President of Landpak,  Inc., a  corporation  which owns,  operates,  manages and
sells real estate from September  1985 to present;  and he was involved in other
corporate real estate ventures and business activities.

Luis Alfonso  Limay was appointed to the position of Project and Mine Manager in
October 1986 and is  responsible  for  managing  the daily  affairs of the Joint
Venture.  During March 1995,  Mr. Limay was appointed to the position of Manager
of El Salvador  operations  which  supersedes  his  position as Project and Mine
Manager.  Mr. Limay was  employed by Sanseb from 1977 through  March 1978 as its
chief  geologist.  He  obtained  degrees in  geology  and  engineering  from the
National University of San Marlos, Lima, Peru, and the University of Toronto. He
was employed as chief geologist by Rosario  Resources in a Honduran  underground
mining operation and he held the same position with Canadian  Javelin,  a silver
mining company that formerly operated in El Salvador.


                                                                       PART II

Item 5.  Market for the Company's Common Stock and Related Stockholders' Matters

(a)  Principal Market and Common Stock Price

Since May 5, 1999, the Company's  common shares are being traded on the Over the
Counter Bulletin Board (OTCBB) under the symbol CGCO.OB. Prior to this time, the
common  shares were traded  since 1968 on the Over the Counter,  American  Stock
Exchange, Boston Stock Exchange and on the Nasdaq Smallcap.

The  following  table  reflects  the range of high and low  trade  prices of the
common  shares as reported by Nasdaq or the OTCBB for the period ended March 31,
2004 and the highest  and lowest  trade price  during each  quarter  through the
period ended March 31, 2003.
<TABLE>
<CAPTION>

For the period ended                                 March 31, 2004                 March 31, 2003
                                                   High           Low            High             Low
<S>                       <C>                     <C>            <C>            <C>              <C>
First quarter ending June 30                      $0.30          $0.15          $0.45            $0.08
Second quarter ending September 30                $0.37          $0.21          $0.29            $0.07
Third quarter ending December 31                  $0.31          $0.22          $0.31            $0.10
Fourth quarter ending March 31                    $0.30          $0.20          $0.42            $0.14
</TABLE>

(b)  Approximate Number of Holders of Common Shares

As of March 31, 2004, the common shares were held by approximately 4,000
shareholders; it is estimated that over  95% are United States' residents.

As of March 31, 2004,  there were  approximately  1,631 holders of record of the
Company's  common  shares.  The  number  of  shareholders  of  the  Company  who
beneficially  own  shares  in  nominee  or  "street  name"  or  through  similar
arrangements are estimated by the Company to be approximately 2,369.

As of March 31, 2004,  there were issued and  outstanding:  (a) 22,681,591
shares of common stock;  and (b) 210,000 stock options to purchase  common
stock.

(c)  Equity Compensation Plans

None.

(d)  Dividend History

Subject to the rights of holders of any outstanding  series of preferred  shares
to receive  preferential  dividends,  and to other  applicable  restrictions and
limitations,  holders  of  shares of  common  shares  are  entitled  to  receive
dividends if and when  declared by the Board of Directors  out of funds  legally
available. No dividends were payable during the last fiscal year ended March 31,
2004.  The  declaration  of future  dividends will be determined by the Board of
Directors  in light of the  Company's  earnings,  cash  requirements  and  other
relevant considerations.

(e)  Issue of Securities

During the fourth quarter ended March 31, 2004, the Company issued 69,629 shares
to its  Directors in payment for  Directors'  fees,  31,481 shares for Officer's
compensation;  and 13,102 to a Director for services rendered. These shares were
issued pursuant to a Securities and Exchange Commission Form S-8 Registration.







Item 6.  Selected Financial Data

The following table sets forth certain financial information with respect to the
Company  and is  qualified  in  its  entirety  by  reference  to the  historical
financial  statements  and notes  thereto of the  Company  included  in "Item 8.
Financial  Statements and  Supplementary  Data." The statement of operations and
balance  sheet  data  included  in this  table for each of the five years in the
fiscal  period  ended  March  31st,  were  derived  from the  audited  financial
statements and the accompanying notes to those financial statements.
<TABLE>
<CAPTION>

                               Year Ended March 31
                                        -------------------------------------------------------------------------------------------
                                                  2004            2003           2002           2001             2000
                                                  ----            ----           ----           ----             ----
Income statement data
<S>                                      <C>                                                            <C>
Total revenue                            $              $               $              $     242,182    $     480,615
                                         ===========================================================    =============
                                                     0               0             38
                                                     =               =             ==
Income (loss) from continuing
operations                               $    (14,381)   $    (35,886)  $    (43,171)  $     129,790     $  (396,232)
                                         =============   =============  =============  =============     ============

Income (loss) from continuing operations per share:

  Basic                                  $     (.0007)   $     (.0019)  $     (.0026)      $            $     (.0326)
                                         =============   =============  =============      =========    =============
                                                                                               .0092
  Diluted                                $     (.0007)   $     (.0018)  $     (.0025)      $            $     (.0282)
                                         =============   =============  =============      =========    =============
                                                                                               .0086
  Weighted average shares - basic           21,089,812      18,907,958     16,349,170     14,174,662       12,172,867
                                         =  ==========  =   ==========  =  ==========  =  ==========  =    ==========
  Weighted average shares - diluted         21,299,812      19,867,958     17,019,170     15,094,662       14,053,002
                                         =  ==========  =   ==========  =  ==========  =  ==========  =    ==========
  Cash dividends per common share        $              $               $              $              $
                                         ==============================================================
                                                     0               0              0              0                0
                                                     =               =              =              =                =

Balance sheet data
  Working capital*1                      $     504,882   $     457,538  $     199,573  $     152,906    $     420,963
                                         =============   =============  =============  =============    =============
  Total assets                             $35,384,314     $33,251,674    $31,945,434    $30,302,685      $29,856,201
                                           ===========     ===========    ===========    ===========      ===========
  Short-term obligations*1                 $13,981,516     $12,329,096    $11,486,216   $  9,998,955      $10,231,272
                                           ===========     ===========    ===========   ============      ===========
  Long-term obligations                  $              $               $              $              $
                                         ==============================================================
                                                     0               0              0              0                0
                                                     =               =              =              =                =
  Shareholders' equity                     $21,412,798     $20,922,577    $20,459,218    $20,303,730      $19,624,929
                                           ===========     ===========    ===========    ===========      ===========
</TABLE>

*1   Although the majority of the short-term obligations are due on demand, some
     of these  obligations have the attributes of being long-term as most of the
     debt is due to related  parties who have not called for the payment  except
     for nominal amounts of their  short-term loans during the past five or more
     years.


Item 7.  Management's Discussion and Analysis of Financial Condition and
Results of Operations

Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995

The matters discussed in this report on Form 10-K, when not historical  matters,
are forward-looking  statements that involve a number of risks and uncertainties
that could cause actual results to differ  materially  from  projected  results.
Such  factors  include,   among  others,   the  speculative  nature  of  mineral
exploration,   gold  and  silver  prices,   production  and  reserve  estimates,
litigation,   environmental   and  government   regulations,   general  economic
conditions,  conditions in the  financial  markets,  political  and  competitive
developments  in  domestic  and  foreign  areas in which the  Company  operates,
availability of financing,  force majeure events,  technological and operational
difficulties  encountered in connection  with the Company's  mining  activities,
labor  relations,  other  risk  factors  as  described  from time to time in the
Company's filings with the Securities and Exchange  Commission and other matters
discussed  under this reporting  category.  Many of these factors are beyond the
Company's  ability to control or predict.  The Company  disclaims  any intent or
obligation  to update  its  forward-looking  statements,  whether as a result of
receiving new information, the occurrence of future events, or otherwise. Should
one or  more  of  those  risks  or  uncertainties  materialize,  or  should  any
underlying  assumption  prove  incorrect,  actual  results or outcomes  may vary
materially from those  described  herein as  anticipated,  believed,  estimated,
expected or intended.

Management's  discussion  and analysis  ("MD&A") of the financial  condition and
results of  operations  of the Company  should be read in  conjunction  with the
audited  consolidated  financial  statements and the notes thereto.  The Company
prepares  and files its  consolidated  financial  statements  and MD&A in United
States  ("U.S.")  dollars  and  in  accordance  with  U.S.   generally  accepted
accounting principles ("GAAP").

The following  discussion provides  information on the results of operations for
each of the three years ended March 31,  2004,  2003 and 2002 and the  financial
condition,  liquidity  and capital  resources  for March 31, 2004 and 2003.  The
financial  statements  of the Company  and the notes  thereto  contain  detailed
information that should be referred to in conjunction with this discussion.

Critical Accounting Policies and Estimates

The ensuing  discussion  and  analysis  of  financial  condition  and results of
operations  are  based  on  the  Company's  consolidated  financial  statements,
prepared in accordance  with  accounting  principles  generally  accepted in the
United States of America and contained  within this report on S.E.C.  Form 10-K.
Certain amounts included in or affecting the Company's financial  statements and
related  disclosures  must be estimated,  requiring that certain  assumptions be
made with respect to values or conditions which cannot be made with certainty at
the time the financial statements are prepared.  Therefore, the reported amounts
of the Company's assets and liabilities,  revenues and expenses,  and associated
disclosures  with respect to contingent  assets and  obligations are necessarily
affected by these  estimates.  The more  significant  areas requiring the use of
management  estimates and  assumptions  relate to mineral  reserves that are the
basis  for  future  cash flow  estimates  and  units-of-production  amortization
determination;   recoverability   and  timing  of  gold   production   from  the
heap-leaching process; environmental, reclamation and closure obligations; asset
impairments  (including  estimates  of  future  cash  flows);  useful  lives and
residual  values of  intangible  assets;  fair value of  financial  instruments;
valuation  allowances for deferred tax assets; and contingencies and litigation.
The Company bases its estimates on  historical  experience  and on various other
assumptions that are believed to be reasonable under the  circumstances.  Actual
results  may  differ  from  these  estimates  under  different   assumptions  or
conditions.

A critical  accounting  policy is one that is important to the  portrayal of the
Company's  financial  condition  and  results,  and requires the Company to make
difficult  subjective and/or complex  judgments.  Critical  accounting  policies
cover  accounting  matters  that are  inherently  uncertain  because  the future
resolution  of such  matters is unknown.  The  Company  believes  the  following
accounting policies are critical policies; accounting for its gold ore reserves,
environmental liabilities, income taxes and asset retirement obligations.

The Company believes the following significant  assumptions and estimates affect
its more critical  practices and accounting  policies used in the preparation of
its consolidated financial statements.

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires the Company to make estimates and assumptions for
the reporting period and as of the financial statement date. These estimates and
assumptions  affect  the  reported  amounts  of  assets  and  liabilities,   the
disclosure of contingent  liabilities  and the reported  amounts of revenues and
expenses. Actual results could differ from those amounts.

Gold ore reserves include proved reserves that represent estimated quantities of
gold in which  geological  and  engineering  data  demonstrate  with  reasonable
certainty to be  recoverable  in future years from known reserves under existing
economic and operating conditions.  The gold ore reserves are based on estimates
prepared  by  geology  consultants  and  are  used  to  calculate  depreciation,
depletion and  amortization  (DD&A) and  determine if any  potential  impairment
exists related to the recorded value of the Company's gold ore reserves.

The Company reviews, on an as needed basis, its estimates of costs of compliance
with  environmental  laws and the cleanup of various sites,  including  sites in
which  governmental  agencies  have  designated  the  Company  as a  potentially
responsible  party.  When it is probable that obligations have been incurred and
where a minimum cost or a reasonable  estimate of the actual costs of compliance
or remediation can be determined, the applicable amount is accrued. Actual costs
can differ from estimates due to changes in laws and regulations,  discovery and
analysis of site conditions and changes in technology.

The Company  makes  certain  estimates,  which may include  various tax planning
strategies,  in  determining  taxable  income,  the timing of deductions and the
utilization of tax attributes, which can differ from estimates due to changes in
laws and  regulations,  discovery and analysis of site conditions and changes in
technology.

Management  is required to make  judgments  based on historical  experience  and
future expectations on the future abandonment cost, net of salvage value, of its
mining properties and equipment.  The Company reviews its estimate of the future
obligation  periodically  and will accrue the estimated  obligation based on the
SFAS No. 143 "Account for Asset Retirement Obligations."

From  time  to  time,  the  Company  estimates  its ore  reserves  when it is in
production.   There  are  a  number  of  uncertainties  inherent  in  estimating
quantities  of  reserves,  including  many  factors  beyond  the  control of the
Company.  Ore reserve estimates are based upon engineering  evaluations of assay
values derived from samplings of drill holes and other  openings.  Additionally,
declines  in the market  price of gold may render  certain  reserves  containing
relatively  lower  grades  of  mineralization   uneconomic  to  mine.   Further,
availability  of permits,  changes in  operating  and capital  costs,  and other
factors could materially and adversely affect ore reserves. The Company uses its
ore reserve  estimates in determining the unit basis for mine  depreciation  and
closure rates, as well as in evaluating mine asset  impairments.  Changes in ore
reserve estimates could significantly affect these items.

The Company will assess its producing  properties and undeveloped mineral claims
and leases for impairment when events or changes in circumstances warrant and at
least  annually.  For  producing  properties  and  equipment,  an  impairment is
recognized  when the  estimated  future  cash flows  (undiscounted  and  without
interest)  expected to result in the use of the asset are less than the carrying
amount of that asset.  Measurement of the impairment loss is based on discounted
cash flows.  Undeveloped  mineral claims and leases are measured on a fair value
basis. Fair value with respect to such mineral  interest,  pursuant to Statement
of Financial  Accounting  Standards No. 144,  Accounting  for the  Impairment or
Disposal of Long-Lived  Assets,  effective  January 1, 2002,  would generally be
assessed with reference to comparable  property sales transactions in the market
place.

The  Company  adopted  Statement  of  Financial  Accounting  Standards  No.  128
(SFAS128), Earnings per Share in prior years. SFAS128's objective is to simplify
the  computation of earnings per share (EPS) and to make the U.S.  standard more
compatible  with  that  of  other  countries  and the  International  Accounting
Standards   Committee.   SFAS128   supersedes  APB  Opinion  15,  replacing  the
presentation  of "primary"  and "fully  diluted" EPS with "basic" and  "diluted"
EPS. Basic EPS is computed by dividing income  available to common  shareholders
(net income less any  dividends  declared on preferred  stock and any  dividends
accumulated  on cumulative  preferred  stock) by the weighted  average number of
common shares outstanding. Diluted EPS requires an adjustment to the denominator
to  include  the  number  of  additional  common  shares  that  would  have been
outstanding if dilutive  potential common shares had been issued.  The numerator
is adjusted to add back any  convertible  preferred  dividends and the after-tax
amount of interest recognized with any convertible debt.

The  financial  statements  for the fiscal years ended March 31, 2004,  2003 and
prior years  reflect and include  Commerce  Group Corp.'s  subsidiaries  and the
Commerce  Group  Corp./Sanseb  Joint Venture  (Joint  Venture) on a consolidated
basis.  Previously,  the Company reported the investment in the Joint Venture as
advances to the Joint Venture and the Company's  advances  included the interest
earned on these advances in anticipation of the interest being  reimbursed.  Now
these  advances  are  restated  and  combined  with the  Company's  Consolidated
Financial  Statements.  Although the  elimination of interest income reduces the
retained  earnings,  it does not eliminate the interest charged by and earned by
the Company which is due and payable to it and which is maintained  additionally
with a separate  accounting.  At such time when the profits from the gold mining
operation are  distributed,  the interest  earned on these advances will be paid
first to the Company pursuant to an agreement  entered into by the joint venture
parties.

For the fiscal year ended March 31, 2004,  the Company was able to segregate the
disbursements  to the Joint  Venture to  identify  the  category  to be charged.
Reference is made to Note 2 in the financial statements for additional details.






Gold Ore Reserves (03/31/04)

The Company's geologists have defined the following San Sebastian Gold Mine gold
ore reserves:
<TABLE>
<CAPTION>

                                      Tons                   Average Grade                 Ounces
<S>                                <C>                           <C>                      <C>
Virgin ore                         14,404,096                    0.081                    1,166,732
Stope fill estimated                 1,000,000                   0.340                      340,000
                            --       ---------                                    --        -------
  Totals                           15,404,096                                             1,506,732
</TABLE>

The  estimated  recoverable  ounces by  processing  through the San  Cristobal
 Mill and Plant  ranges from 85% to 95%;  the recovery of gold from the
heap-leaching operations should range from 60% to 70%.

Precious Metal Mining Strategy

The Joint  Venture has produced  gold from March 31, 1995  through  December 31,
1999.  Its San  Cristobal  Mill and Plant  (SCMP)  consisted  primarily  of used
equipment  that had been  installed  at its  leased  site by a  previous  mining
company.  The used  processing  equipment  was acquired by the Joint  Venture on
February 23, 1993, and the SCMP operations were officially suspended as of March
31, 2000. During this period, the price of gold suffered a severe decline.

Although while in operation the Company has on a continuous  basis  retrofitted,
modified,  and restored the equipment,  it presently lacks  sufficient  funds to
perform a major overhaul and to expand the SCMP facilities.

The Company's  management has temporarily  suspended its gold  processing  until
such  time  as it has  adequate  funds  for  the  retrofitting,  rehabilitation,
restoration,  overhauling,  and most  importantly  for the expansion of the SCMP
facilities.  During the last two fiscal periods, the price of gold has increased
to a level to place the SCMP into a viable position.

The Company has a number of non-exclusive  independent consulting agreements for
the purpose of raising the sum of up to U.S.  $20  million.  The funds are to be
used to purchase  and  install  equipment,  perform  site  development,  working
capital for the SSGM open-pit, heap-leaching operation, and for the expansion of
the Joint Venture's SCMP.

Through  December  1999,  the  Joint  Venture  produced  gold on a curbed  basis
primarily from processing the tailings and from the virgin ore it was excavating
from its SSGM open pit.  The gold was  processed at its SCMP  facility  which is
located  approximately  15 miles from the SSGM  site.  It is  contemplating  the
installation of a pilot open-pit,  heap-leaching  gold-processing  system on the
SSGM site.  The cone  crushing  system is being erected at this site. It also is
continuing  its SSGM site  preparation,  the  expansion of its  exploration  and
exploitation  targets,  and the  enlargement  and  development  of its  gold ore
reserves. The Montemayor Mine and the Modesto Mine have been placed on a standby
basis  pending  the  advice  from its legal  counsel  relative  to the filing of
applications for concessions (licenses) on the properties it owns or on which it
holds  leases.  All of the mining  properties  are located in the Republic of El
Salvador, Central America.

The Joint Venture will continue its attempts to commence its production of gold.
Its objectives are to have an expanded complementary  operation while continuing
its  endeavor  to  obtain  sufficient  funds for the SSGM  open-pit,  heap-leach
operation.  The Company's main objective and plan, through the Joint Venture, is
to  operate  at  the  SSGM  site,  a  moderate  tonnage,  low-grade,   open-pit,
heap-leaching,  gold-producing  mine.  It intends to commence  this  gold-mining
operation as soon as adequate  funding is in place and the gold price stabilizes
at the current level. Dependent on the grade of gold ore processed and the funds
it is able to  obtain,  it then  anticipates  producing  annually  approximately
10,000  ounces of gold from the SCMP  operation  and  eventually  up to  113,000
ounces  of gold  from its SSGM  open-pit,  heap-leaching  operation.  The  Joint
Venture  continues  on a limited  basis to  conduct  an  exploration  program to
develop  additional gold ore reserves at the SSGM. Since it has the New SSGM, it
is exploring  the Tabanco  Mine and the Santa Lucia Mine,  and plans to commence
production of gold and silver after funds are available.

The Joint  Venture  produced  gold from March 1995 through  December 1999 at the
SCMP through a start-up or preliminary operation,  which was a forerunner of its
greater goals. The Company's  revenues,  profitability and cash flow are greatly
influenced by the price of gold. Gold prices  fluctuate  widely and are affected
by  numerous  factors  which  will be beyond  the  Company's  control,  such as,
expectations for inflation,  the strength of the U.S. dollar,  overproduction of
gold, global and regional demand,  acts of terrorism,  or political and economic
conditions, or for that matter, many other reasons. The combined effect of these
and other factors is difficult; perhaps impossible to predict. Should the market
price of gold fall below the Company's production costs and remain at such level
for any sustained period, the Company could experience losses.

The Company believes that neither it, nor any other  competitor,  has a material
effect on the precious  metal markets and that the price it will receive for its
production  is  dependent  upon  world  market  conditions  over which it has no
control.

Results of Operation for the Fiscal Year Ended March  31, 2004 Compared to
March 31, 2003
-------------------------------------------------------------------------------

There are no revenues as the Company has suspended its gold production  until it
is able to procure the funds it requires to  rehabilitate,  retrofit,  overhaul,
and expand its SCMP and/or when it has funds to commence an open-pit, heap-leach
operation at the SSGM site.  The price of gold has  stabilized  at a price level
that could assure a  profitable  operation.  The Company  recorded a net loss of
$14,381 or $.0007  cents per share.  This  compares  to a net loss of $35,886 or
$.0019 cents per share for the fiscal year ended March 31, 2003.

There was no current or deferred  provision  for income  taxes during the fiscal
period ended March 31, 2004 or 2003.  Additionally,  even though the Company has
an operating tax loss  carryforward,  the Company has previously  recorded a net
deferred  tax  asset  due  to an  assessment  of  the  "more  likely  than  not"
realization criteria required by the Statement of Financial Accounting Standards
No. 109, Accounting for Taxes.

Inflation did not have a material impact on operations in the fiscal years ended
March 31, 2004 or 2003. The Company does not anticipate that inflation will have
a material impact on continuing operations during the next fiscal year.

Interest  expense in the sum of  $1,433,298  was  recorded by the Joint  Venture
during this fiscal period  compared to  $1,212,976  for the same period in 2003,
and it was eliminated with the interest income earned from the Joint Venture.

Almost all of the costs and expenses  incurred by the Company are  allocated and
charged to the Joint  Venture.  The Joint  Venture  capitalizes  these costs and
expenses  and  will  continue  to do so  until  such  time  when  it is in  full
production.  At the time production  commences,  these capitalized costs will be
charged  as an  expense  based  on a per unit  basis.  If the  prospect  of gold
production becomes unlikely,  all of these costs will be written off in the year
that this occurs.

Results of Operation for the Fiscal Year Ended March  31, 2003 Compared to
March 31, 2002
-------------------------------------------------------------------------------

There are no revenues as the Company has suspended its gold production  until it
is able to procure the funds it requires to  rehabilitate,  retrofit,  overhaul,
and expand  its SCMP,  when it has funds to  commence  an  open-pit,  heap-leach
operation  at the SSGM site,  and when the price of gold  stabilizes  at a price
level to assure a  profitable  operation.  The  Company  recorded  a net loss of
$35,886 or $.0019  cents per share.  This  compares  to a net loss of $43,171 or
$.0026 cents per share for the fiscal year ended March 31, 2002.

There was no current or deferred  provision  for income  taxes during the fiscal
period ended March 31, 2003 or 2002.  Additionally,  even though the Company has
an operating tax loss  carryforward,  the Company has previously  recorded a net
deferred  tax  asset  due  to an  assessment  of  the  "more  likely  than  not"
realization criteria required by the Statement of Financial Accounting Standards
No. 109, Accounting for Taxes.

Inflation did not have a material impact on operations in the fiscal years ended
March 31, 2003 or 2002. The Company does not anticipate that inflation will have
a material impact on continuing operations during the next fiscal year.

Interest  expense in the sum of  $1,212,976  was  recorded by the Joint  Venture
during this fiscal period  compared to  $1,026,940  for the same period in 2002,
and it was eliminated with the interest income earned from the Joint Venture.

Almost all of the costs and expenses  incurred by the Company are  allocated and
charged to the Joint  Venture.  The Joint  Venture  capitalizes  these costs and
expenses  and  will  continue  to do so  until  such  time  when  it is in  full
production.  At the time production  commences,  these capitalized costs will be
charged  as an  expense  based  on a per unit  basis.  If the  prospect  of gold
production becomes unlikely,  all of these costs will be written off in the year
that this occurs.

Financing Activities, Liquidity and Capital Resources

As of December 31, 1999, the Joint Venture  suspended its SCMP operations  until
such time as it has adequate  funding to repair,  retrofit,  overhaul and expand
the mill to process  its gold ore,  and at such time that the price of gold will
stabilize  at a  higher  price.  After  almost  five  years  of  24-hour-per-day
operation with used equipment, the plant requires a major overhaul. At that time
the low price of gold did not provide an adequate  cash reserve for these needs.
Additional equipment has to be purchased, delivered and installed.

The Company will  endeavor to commence an open-pit,  heap-leaching  operation at
the SSGM as there is a substantial amount of gold ore that grades less than 0.04
ounces per ton. The Company's  engineers had determined that a 2,000 ton-per-day
open-pit,  heap-leach,  start-up  operation may produce 1,280 ounces of gold per
month.  It is necessary to raise  adequate  funds from outside  sources for this
operation;  the amount  required is dependent  on the  targeted  daily volume of
production.

The Company  estimates that it will need up to U.S. $17 million to start a 2,000
ton-per-day  open-pit,   heap-leaching  operation.   Eventually  the  production
capacity  would be  increased  in  stages to 6,000  tons per day so that  annual
production  could  be  113,000  ounces  of  gold  at the  SSGM.  The  use of the
$17,000,000  proceeds is as follows:  $8,250,000  for mining  equipment  and the
completion  of  erecting  a  crushing  system;  $3,783,548  for  the  processing
equipment and site and  infrastructure  costs;  and a sum of $4,966,452 is to be
used for working  capital.  The once depressed  price of gold has  substantially
increased during the last two years.  The Company's  incredibly low common share
market price is a major deterrent in raising cash for the Company's programs.

The Company  continues to be cognizant of its cash liquidity until it is able to
produce  adequate  profits  from its SSGM gold  production.  It will  attempt to
obtain  sufficient  funds to assist the Joint  Venture in placing  the SSGM into
production as the anticipated  profits from the existing SCMP operation  (unless
accumulated over a period of time) appear  insufficient to meet the SSGM capital
and the other mining  exploration  requirements.  In order to continue obtaining
funds to conduct the Joint  Venture's  exploration,  exploitation,  development,
expansion  programs,  and  the  production  of  gold  from  the  SSGM  open-pit,
heap-leaching  operation,  it is necessary  for the Company to obtain funds from
other  sources.  The  Company  may have to borrow  funds by issuing  open-ended,
secured,  on-demand or unsecured  promissory notes, by selling its shares to its
directors,  officers and other interested accredited  investors,  or by entering
into a joint venture,  merging,  or developing an acceptable  form of a business
combination with other companies.

During the past, the Joint Venture was engaged in exploration,  exploitation and
development  programs designed to increase its gold ore reserves.  The prospects
of expanding the gold reserves are positive.  The Company believes that the past
invested  funds  significantly  contributed  to the value of the SSGM and to the
value of its other mining  prospects as the results of the  exploratory  efforts
evidence the  potential for a  substantial  increase of gold ore  reserves.  The
Company  was  unable to obtain  sufficient  funds  during  this  fiscal  year to
complete  the  modification  and  expansion  of the  SCMP or for  its  open-pit,
heap-leach  operation.  However, the Company did invest funds during this fiscal
period, which were used to progress the erection of the cone crushing system and
to maintain the SCMP.

The Company  continues to rely on its directors,  officers,  related parties and
others for its funding needs. The Company believes that it may be able to obtain
such  short-term  and/or equity funds as are required from similar sources as it
has in the past. It further believes that the funding needed to proceed with the
continued  exploration  of the other  exploration  targets  for the  purpose  of
increasing  its gold ore reserves will be greatly  enhanced if the price of gold
continues  to  increase.   These  exploration  programs  will  involve  airborne
geophysics, stream chemistry,  geological mapping, trenching, drilling, etc. The
Joint Venture  believes that it may be able to joint venture or enter into other
business arrangements to share these exploration costs with other entities.

From  September 1987 through March 31, 2004, the Company has advanced the sum of
$44,295,125 to the Joint Venture (which includes interest charges payable to the
Company),  and three of the  Company's  subsidiaries  have  advanced  the sum of
$590,265,  for a total of $44,885,390.  This  investment  includes the charge of
$27,200,167 for interest  expense during this period of time. The funds invested
in the Joint Venture were used primarily for the exploration,  exploitation, and
development of the SSGM, for the  construction  of the Joint Venture  laboratory
facilities  on real  estate  owned by the  Company  near the SSGM site,  for the
operation  of the  laboratory,  for the  purchase of a 200-ton per day used SCMP
precious metals' cyanide leaching mill and plant, for the initial  retrofitting,
repair,  modernization  and  expansion of its SCMP  facilities,  for  consumable
inventory,  for working  capital,  for  exploration and holding costs of the San
Felipe-El Potosi Mine, the Modesto Mine, the Hormiguero Mine, and the Montemayor
Mine, for SSGM infrastructure, including rewiring, repairing and installation of
about two miles of the  Company's  electric  power  lines to provide  electrical
service, for the purchase of equipment,  laboratory chemicals, and supplies, for
parts and supply  inventory,  for the maintenance of the  Company-owned  dam and
reservoir, for extensive road extension and preservation,  for its participation
in the construction of a community bridge, for community  telephone building and
facilities,  for a  community  place of  worship,  for the  purchase of the real
estate on the Modesto  Mine,  for leasing the  Montemayor  real estate,  for the
purchase and erection of a cone  crushing  system,  for diamond  drilling at the
SSGM,  for the  purchase  of a rod mill and a carbon  regeneration  system,  for
holding costs, and all other related needs.

Recently Issued Accounting Standards

The Company adopted  Interpretation  No. 45,  Guarantor's  Accounting and
Disclosure  Requirements for Guarantees,  Including  Indirect  Guarantees of
Indebtedness  of  Others  (FIN No.  45).  FIN No. 45  broadens  the
disclosures  to be made by the  guarantor  about its  obligations  under
certain
guarantees.  FIN No. 45 also  requires a guarantor to recognize a liability for
 the fair value of the  obligation  undertaken in issuing the guarantee
at the inception of a guarantee.  Adoption of FIN No. 45 did not have an impact
 on the Company's  financial position,  results of operations,  or cash
flows as of  March 31, 2004.

In  January  2003,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Interpretation No. 46, Consolidation of Variable Interest Entities, (FIN No. 46)
which provides  guidance on the  identification  and reporting for entities over
which  control is achieved  through means other than voting  rights.  FIN No. 46
defines  such  entities  as  variable  interest  entities  (VIEs).  A FASB Staff
Position issued in October 2003 deferred the effective date of FIN No. 46 to the
first  interim or annual  period  ending  after  December  15, 2003 for entities
created  before  February  1, 2003 if certain  criteria  are met.  Subsequently,
during  December  2003,  the FASB  issued a revision to FIN No. 46 (FIN No. 46R)
which  replaces  the  original  interpretation.   Application  of  this  revised
interpretation  is required in  financial  statements  for  companies  that have
interests  in VIEs or potential  VIEs  commonly  referred to as  special-purpose
entities  created  after  December 15, 2003.  Application  for entities  created
before  January 1, 2004 is required in financial  statements  for periods ending
after March 15,  2004.  The Company  believes it has no such  variable  interest
entities  and as a result  FIN No. 46 did not have an  impact  on the  Company's
financial position, results of operations, or cash flows for the year then ended
March 31, 2004.

In April  2003,  the FASB issued SFAS No. 149,  Amendment  of  Statement  133 on
Derivative  Instruments  and Hedging  Activities to amend and clarify  financial
accounting  and  reporting  for  derivative   instruments,   including   certain
derivative  instruments  embedded in other contracts and for hedging activities.
The changes in this  statement  improve  financial  reporting by requiring  that
contracts with comparable  characteristics be accounted for similarly to achieve
more  consistent   reporting  of  contracts  as  either   derivative  or  hybrid
instruments.  SFAS No. 149 is effective for  contracts  entered into or modified
after  June 30,  2003.  SFAS No.  149 did not have any  impact on the  Company's
financial position, results of operations, or cash flows for the year then ended
March 31, 2004.

In May 2003,  the FASB  issued SFAS No. 150,  Accounting  for Certain  Financial
Instruments  with  Characteristics  of both  Liabilities  and  Equity  providing
guidance  regarding  classification  of  freestanding  financial  instruments as
liabilities  (or  assets in some  circumstances).  SFAS No.  150 was  originally
effective for financial instruments entered into or modified after May 31, 2003,
and otherwise at the beginning of the first interim period  beginning after June
15, 2003, and was to be applied prospectively. However, on October 29, 2003, the
FASB decided to defer the provisions of paragraphs  nine and ten of SFAS No. 150
as  they  apply  to  mandatorily  redeemable  non-controlling  interests.  These
provisions  required that mandatorily  redeemable  minority interests within the
scope of SFAS No. 150 be  classified  as a  liability  on the  parent  company's
financial statements in certain situations, including when a finite-lived entity
is  consolidated.  The  deferral  of those  provisions  is expected to remain in
effect  while these  interests  are  addressed  in either Phase II of the FASB's
Liabilities and Equity Project or Phase II of the FASB's  Business  Combinations
Project.  The FASB also  decided to (i)  preclude  any  "early"  adoption of the
provisions of paragraphs nine and ten for these non-controlling interests during
the  deferral  period;  and  (ii)  require  the  restatement  of  any  financial
statements  that have  been  issued  where  those  provisions  were  applied  to
mandatorily redeemable  non-controlling interests. SFAS No. 150 did not have any
impact on the Company' financial position,  results of operations or cash flows,
for the year then ended March 31, 2004.

In July 2001, the Financial Accounting Standard Board (FASB) issued Statement of
Financial  Accounting  Standards (SFAS) No. 142,  "Goodwill and Other Intangible
Assets," which supersedes the Accounting  Principles Board (APB) Opinion No. 17,
"Intangible  Assets." This  Statement  addresses the accounting and reporting of
goodwill  and other  intangible  assets  subsequent  to their  acquisition.  The
Statement  also provides  specific  guidance on testing  goodwill and intangible
assets  for   impairment.   SFAS  No.  142   provides   that  (i)  goodwill  and
indefinite-lived  intangible assets will no longer be amortized, (ii) impairment
will be measured using various  valuation  techniques  based on discounted  cash
flows,  (iii)  goodwill will be tested for  impairment at least  annually at the
reporting unit level,  (iv) intangible  assets deemed to have an indefinite life
will be tested for impairment at least  annually and (v) intangible  assets with
finite lives will be amortized over their useful lives. At this time the Company
believes that the impact of this standard should not have any material impact on
the financial statements taken as a whole.

In August 2001, the FASB issued SFAS No. 143,  "Accounting for Asset  Retirement
Obligations," which addresses financial accounting and reporting for obligations
associated with the retirement of tangible  long-lived assets and the associated
asset  retirement  costs.  This  Statement  requires  that the  fair  value of a
liability  for an asset  retirement  obligation  be  recognized in the period in
which it is incurred  if a  reasonable  estimate of fair value can be made.  The
associated asset retirement costs are capitalized as part of the carrying amount
of the long-lived asset. All provisions of this Statement will be effective when
the occurrence  arises.  At this time, the Company believes that the adoption of
SFAS No.  143  should not have a  material  impact on the  Company's  results of
operations or financial position.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal  of  Long-Lived  Assets."  This  Statement  supersedes  SFAS  No.  121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of" and amends APB No. 30,  "Reporting  the Effects of Disposal of a
Segment of a Business,  and  Extraordinary,  Unusual and Infrequently  Occurring
Events and  Transactions."  This Statement  requires that long-lived assets that
are to be  disposed  of by sale be  measured  at the lower of book value or fair
value less costs to sell. SFAS No. 144 retains the fundamental provision of SFAS
121 for (a) recognition  and measurement of the impairment of long-lived  assets
to be held and used and (b)  measurement of long-lived  assets to be disposed of
by sale.  This  statement also retains APB No. 30's  requirement  that companies
report  discontinued  operations  separately  from  continuing  operations.  All
provisions of this Statement are effective in the first quarter of 2003. At this
time,  the  Company  believes  that the impact of this  standard  should have no
material impact on the financial statements taken as a whole.

In  June  2002,  the  Financial  Accounting  Standards  Board  issued  Financial
Accounting  Standards  No. 146,  Accounting  for Costs  Associated  with Exit or
Disposal  Activities  (SFAS No.  146).  SFAS No.  146 is  effective  for exit or
disposal  activities  that are initiated  after March 31, 2003.  This  Statement
addresses  financial  accounting and reporting for costs associated with exit or
disposal  activities and nullifies  Emerging  Issues Task Force (EITF) Issue No.
94-3, "Liability Recognition for Certain Employee Termination Benefits and Other
Costs  to  Exit  an   Activity   (including   Certain   Costs   Incurred   in  a
Restructuring)." At this time, the Company believes that SFAS No. 146 should not
have a material impact on its results of operations or financial position.

In November 2002, the Financial Accounting Standards Board issued Interpretation
No. 45,  Guarantor's  Accounting and  Disclosure  Requirements  for  Guarantees,
Including Indirect Guarantees of Indebtedness of Others (FIN No. 45). FIN No. 45
elaborates on the  disclosures to be made by the guarantor  about is obligations
under certain guarantees. FIN No. 45 also clarifies that a guarantor is required
to recognize, at the inception of a guarantee, a liability for the fair value of
the obligation  undertaken in issuing the guarantee.  As required by FIN No. 45,
the Company has adopted the disclosure  requirements  effective  March 31, 2003.
The Company believes that the initial recognition and measurement  provisions of
FIN No. 45 on a prospective  basis for guarantees issued or modified after March
31, 2003 should not have any  material  impact on its results of  operations  or
financial position.

Employees

As of March 31, 2004,  the Joint  Venture  employed  between 35 and 45 full-time
persons in El Salvador to perform its  limited  exploration,  exploitation,  and
development  programs;  to erect the cone crushing  system,  to provide  24-hour
seven-day-a-week  security at three  different  sites;  to provide  engineering,
geology,   drafting,   and   computer-related   services;   and  to  handle  the
administration  of its  activities.  None of these  employees are covered by any
collective  bargaining  agreements.  It has developed a harmonious  relationship
with its employees,  and it believes that in the past, it was one of the largest
single  non-agricultural  employers in the El Salvador  Eastern Zone.  Also, the
Company  employs up to four  persons,  including  part-time  help, in the United
States.  Since the Joint Venture has laid off most of its  employees,  the Joint
Venture had to pay the  severance  pay and other  benefits to its  employees and
therefore it had to sell and continues to sell the Company's common shares which
were issued to the Commerce Group Corp.  Employee Benefit  Account.  El Salvador
employees are entitled to receive  severance  pay, which is based on one month's
pay for each year of employment.

Related Party Loans, Obligations and Transactions

The  related  party  transactions  are  included  in  detail in the Notes to the
Consolidated Financial Statements.

Company Advances to the Joint Venture

Since  September  1987  through  March 31, 2004,  the Company,  and three of its
subsidiaries,  have advanced to the Joint Venture  $44,885,390.  Included in the
total advances is the interest charged to the Joint Venture by the Company which
amounts to $27,200,167  through March 31, 2004. The Company furnishes all of the
funds required by the Joint Venture.  This interest  charge has been  eliminated
from these financial statements.

Efforts to Obtain Capital

Since the  concession  was granted,  and through the present  time,  substantial
effort is  exercised  by the  Directors  and  Officers in  attempting  to secure
funding through various  sources,  all with the purpose to expand the operations
of the SCMP, to construct an open-pit heap-leach operation at the SSGM site, and
to continue the exploration of its other mining prospects.

The Company, Sanseb, and the Joint Venture consider the past political situation
in the Republic of El Salvador to have been unstable, and believe that the final
peace  declaration  on December 16, 1992,  has put an end to the conflict.  Even
though  many years have  passed,  the stigma of the past  unfavorable  political
status in the Republic of El Salvador  exists and  therefore  certain  investors
continue to be apprehensive to invest the funds required.  However, as explained
in this  report,  the Company was able to obtain a sum of funds to invest in the
expansion  and  retrofitting  of its SCMP and for the  exploration  of its other
mining  prospects.  The decline in the  Company's  stock market price places the
Company in a situation of  substantially  diluting its common shares in order to
raise  equity  capital.  The  Company  believes  that it will be able to  obtain
adequate  financing  to conduct its  operations  from the same sources as in the
past. There are no assurances that funds will be available, except at this time,
there is a greater  world-wide  interest in the ownership of gold.  The price of
gold has increased  substantially  during this past fiscal year which encourages
investors to invest in gold mining companies.

Environmental Regulations

The  Company's  operations  are subject to  environmental  laws and  regulations
adopted by various  governmental  authorities in the  jurisdictions in which the
Company operates.  Accordingly,  the Company has adopted policies, practices and
procedures  in the areas of  pollution  control,  product  safety,  occupational
health and the  production,  handling,  storage,  use and  disposal of hazardous
materials to prevent material  environmental  or other damage,  and to limit the
financial liability which could result from such events.  However,  some risk of
environmental or other damage is inherent in the business of the Company,  as it
is with other companies engaged in similar businesses.

The DHM  requires  environmental  permits  to be issued in  connection  with the
application  of the Renewed  SSGM.  The issuance of these  permits are under the
jurisdiction of the El Salvador  Ministry of Environment  and Natural  Resources
Office (MARN).  On October 15, 2002, MARN issued an  environmental  permit under
Resolution  474-2002  for  the  SCMP.  On  October  20,  2002,  MARN  issued  an
environmental permit under Resolution 493-2002 for the Renewed SSGM Exploitation
area.

Dividends

For the foreseeable  future,  it is anticipated that the Company will use all of
its earnings to finance its growth and expansion,  therefore, dividends will not
be paid to shareholders.

Impact of Inflation

The impact of inflation on the Company has not been  significant in recent years
because of the  relatively  low rates of inflation and deflation  experienced in
the United States.



Item 7(a).  Quantitative and Qualitative Disclosures about Market Risk

Commodity Prices

When in production,  the Company's  earnings and cash flow will be significantly
impacted  by changes  in the market  price of gold.  Gold  prices can  fluctuate
widely and are affected by numerous factors, such as demand,  production levels,
economic policies of central banks,  producer  hedging,  and the strength of the
U.S.  dollar  relative  to other  currencies.  During the last five  years,  the
average  annual market price of gold has  fluctuated  between $270 per ounce and
$375 per  ounce.  The  Company  has not been  engaged in any  hedging  contracts
whatsoever.

Foreign Currency

The Company  conducts the majority of its operations in the Republic of El
Salvador,  Central  America.  Currently,  El Salvador is on the U.S. dollar
system, and therefore all receipts and expenditures since January 1, 2001 are
in U.S. dollars.

Cautionary Statement For Purposes of the "Safe Harbor" Provisions of the
Private Securities Litigation Reform Act of 1995

Some of the statements contained in this report are forward-looking  statements,
such as estimates  and  statements  that  describe the  Company's  future plans,
objectives  or  goals,  including  words  to the  effect  that  the  Company  or
management expects a stated condition or result to occur. Since  forward-looking
statements  address  future events and  conditions,  by their very nature,  they
involve  inherent  risks and  uncertainties.  Actual  results in each case could
differ materially from those currently  anticipated in such statements by reason
of factors  such as  production  at the  Company's  mines,  changes in operating
costs,  changes in general  economic  conditions and conditions in the financial
markets,  changes in demand and prices for the  products  the Company  produces,
litigation, legislative, environmental and other judicial, regulatory, political
and  competitive  developments  in areas  in  which  the  Company  operates  and
technological  and  operational  difficulties  encountered  in  connection  with
mining.  Many of these  factors are beyond the  Company's  ability to control or
predict.   The  Company  disclaims  any  intent  or  obligation  to  update  its
forward-looking  statements,  whether as a result of receiving new  information,
the occurrence of future events, or otherwise.

Item 8.  Financial Statements and Supplementary Data

                                     Index to Consolidated Financial Statements
                                               And Supplementary Financial Data
<TABLE>
<CAPTION>

                                                                                                                            Page

<S>                                                                                                           <C>
Report of Independent Public Accountant........................................................................37

Financial Statements:

Consolidated Balance Sheets, Years Ended March 31, 2004 and 2003...............................................38
Consolidated Statements of Operations, Years Ended March 31, 2004, 2003 and 2002...............................39
Consolidated Statements of Changes in Shareholders' Equity
  Years Ended March 31, 2004, 2003 and 2002....................................................................40
Consolidated Statements of Cash Flows, Years Ended March 31, 2004, 2003 and 2002...............................41
Notes to Consolidated Financial Statements.....................................................................43

Supplementary Financial Data:

Report of Independent Accountant on the Financial Statement Schedules..........................................68
</TABLE>

Schedules  of  financial  statements  other than those  listed  herein have been
omitted since they are either not required, are not applicable,  or the required
information is included in the financial statements and related notes.




<PAGE>





                                        REPORT OF INDEPENDENT PUBLIC ACCOUNTANT


To the Shareholders and Board of Directors of
Commerce Group Corp.

In my opinion,  the  accompanying  consolidated  balance  sheets and the related
consolidated statements of income, comprehensive income, shareholders' equity
 and
cash flows present fairly, in all material  respects,  the financial position of
 Commerce Group Corp., its subsidiaries, and the Commerce/Sanseb Joint Venture
at March 31, 2004 and 2003, and the results of all operations and cash flows for
 each of the three years in the period ended March 31, 2004 in conformity
with  accounting  principles  generally  accepted  in the United States of
 America.  These  financial  statements are the responsibility of the Company's
management;  my  responsibility  is to express an opinion on these  financial
 statements  based on my audits.  I conducted  my audits of these  statements in
accordance with auditing  standards  generally  accepted in the United States of
America,  which  require that I plan and perform the audit to obtain  reasonable
assurance about whether the financial statements are free of material
  misstatement.  An audit includes  examining,  on a test basis,  evidence
supporting the
amounts and disclosures in the financial  statements,  assessing the accounting
 principles used and significant  estimates made by management,  and evaluating
the overall financial statement presentation.  I believe that my audits provide
 a reasonable basis for my opinion.

Bruce Michael Redlin, CPA, LLC
Certified Public Accountant



West Allis, Wisconsin
May 10, 2004

<TABLE>
<CAPTION>

<PAGE>


                   COMMERCE GROUP CORP., ITS SUBSIDIARIES, AND THE JOINT VENTURE
                                          Consolidated Balance Sheets--March 31

                                                                                       2004
                                                                           ----------------
                                                                                                       2003
                                                                                                       ----
                                                   ASSETS
 Current assets
<S>                                                                          <C>              <C>
   Cash                                                                      $       30,348   $       28,004
   Investments                                                                      219,098          194,578
   Accounts receivable                                                              608,669          608,212
   Inventories                                                                       39,562           39,562
   Prepaid items and deposits                                                        95,794           41,901
                                                                           --------- ------  ---------------
     Total current assets                                                           993,471          912,257

 Real estate                                                                              0           23,336
 Property, plant and equipment, net                                               4,288,953        4,280,912
 Mining resources investment                                                     30,111,890       28,035,169
                                                                           --    ----------  --   ----------
   Total assets                                                                 $35,394,314      $33,251,674
                                                                                ===========      ===========
                                                 LIABILITIES
 Current liabilities
   Accounts payable                                                           $     488,589   $     454,719
   Notes and accrued interest payable to related parties                          9,400,682       8,027,380
   Notes and accrued interest payable to others                                     247,579         225,922
   Accrued salaries                                                               2,871,128       2,672,415
   Accrued legal fees                                                               327,015         326,941
   Other accrued expenses                                                           646,523         621,719
                                                                           -------  -------  --------------
       Total liabilities                                                         13,981,516      12,329,096

 Commitments and contingencies (Notes 2, 4, 5, 6, 7, 8, 10 & 12)

                                            SHAREHOLDERS' EQUITY
 Preferred Stock
   Preferred stock, $0.10 par value:
   Authorized 250,000 shares;
   Issued and outstanding
   2004-none; 2003-none                                                                   0               0

 Common  stock,  $0.10 par  value:  Authorized  50,000,000  shares;  Issued  and
   outstanding:
   2004-22,681,591                                                                2,268,159
   2003-20,407,429                                                                                2,040,743
 Capital in excess of par value                                                  19,274,597      18,997,412
 Retained earnings (deficit)                                                      (129,958)       (115,577)
                                                                           -----  ---------  --------------
     Total shareholders' equity                                                  21,412,798       20,922,578
                                                                            --   ----------  --   ----------
     Total liabilities and shareholders' equity                                 $35,394,314      $33,251,674
                                                                                ===========      ===========
</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
 statements.


<PAGE>


                  COMMERCE GROUP CORP., ITS SUBSIDIARIES, AND THE JOINT VENTURE
                                          Consolidated Statements of Operations
                                                    For the Year Ended March 31

<TABLE>
<CAPTION>

                                                                       2004              2003            2002
                                                                       ----              ----            ----
<S>                                                                       <C>               <C>             <C>
Revenues:                                                                 0                 0               0

Expenses:
  General and administrative                                     14,381            35,886
                                                            ---------------  ----- ------
                                                                                                   43,209
    Total expenses                                                   14,381            35,886          43,209

Other income:
  El Salvador added value tax refund                                                        0
                                                            ---------------  ----------------
                                                                          0                                38
                                                                          -                                --
    Other income                                                                            0
                                                            ---------------  ----------------
                                                                          0                                38
                                                                          -                                --

Net profit (loss)                                               $  (14,381)       $  (35,886)     $  (43,171)
  Credit (charges) for income taxes                                                         0
                                                            ---------------  ----------------
                                                                          0                                 0
                                                                          -                                 -
Net income (loss) after income tax credit (charge)              $  (14,381)       $  (35,886)     $  (43,171)
                                                                ===========       ===========     ===========

Net income (loss) per share basic                              $    (.0007)      $    (.0019)    $    (.0026)
                                                               ============      ============    ============

Net income (loss) per share diluted                            $    (.0007)      $    (.0018)    $    (.0025)
                                                               ============      ============    ============

Weighted av. common shares outstanding                           21,089,812        18,907,958      16,349,170
                                                                 ==========        ==========      ==========

Weighted av. diluted common shares                               21,299,812        19,867,958      17,019,170
                                                                 ==========        ==========      ==========

</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
 statements.


<PAGE>


                   COMMERCE GROUP CORP., ITS SUBSIDIARIES, AND THE JOINT VENTURE
                      Consolidated Statements of Changes in Shareholders' Equity
                              For the Years Ended March 31, 2004, 2003 and 2002

<TABLE>
<CAPTION>

                                                     Common Stock
                                   -----------------------------------------------------
                                                                                      Capital in      Retained
                                                      Number of                       Excess of       Earnings
                                                                        Par           Par Value       (Deficit)
                                                     Shares            Value

<S>            <C> <C>                                <C>               <C>             <C>              <C>
Balances March 31, 2001                               15,794,008        1,579,401       18,760,849       (36,520)

Net income (loss) for FY March 31, 2002                                                                  (43,171)

  Dir./off./employee/services comp.                    1,154,000          115,400            5,260
  Payment of debt                                        250,000           25,000           12,500
  Cash                                                   270,000           27,000           13,500       ________
                                                 -----   -------  -------  ------  ---------------
Balances March 31, 2002                               17,468,008        1,746,801       18,792,109       (79,691)

Net income (loss) for FY March 31, 2003                                                                  (35,886)

  Dir./off./employee/services comp.                      693,221           69,322           85,848
  Payment of debt                                      1,435,200          143,520           85,805
  Cash                                                   811,000           81,100           33,650       ________
                                                 -----   -------  -------  ------  ---------------
Balances March 31, 2003                               20,407,429       $2,040,743      $18,997,412     $(115,577)

Net income (loss) for FY March 31, 2004                                                                  (14,381)

  Dir./off./employee/services comp.                      630,862           63,086           92,014
  Payment of debt                                        928,300           92,830          138,657
  Stock options exercised                                230,000           23,000            6,500
  Cash                                                   485,000           48,500           63,350
  Reduce asset account                                 _________        _________         (23,336)       ________
                                                                                   ------ --------
Balances March 31, 2004                               22,681,591       $2,268,159      $19,274,597     $(129,958)
                                                      ==========       ==========      ===========     ==========

</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
 statements.


<PAGE>


                  COMMERCE GROUP CORP., ITS SUBSIDIARIES, AND THE JOINT VENTURE
                                          Consolidated Statements of Cash Flows
                                                   For the Years Ended March 31


<TABLE>
<CAPTION>
                                                                                 2004            2003             2002
                                                                        -------------  --------- ----  --------   ----
Operating activities:
<S>                                                                       <C>             <C>              <C>
  Net income (loss)                                                       $  (14,381)     $  (35,886)      $  (43,171)
Adjustments  to  reconcile  net  income  (loss)  to net cash  used in  operating
activities:
Depreciation                                                                        0               0                0
Changes in assets and liabilities
  Decrease (increase) in account  receivables and investments                (24,977)       (296,936)            1,680
  Decrease (increase) in prepaid items and deposits                          (53,893)        (16,854)            8,934
  Increase (decrease) in accounts payable and accrued liabilities              58,750          58,915         (54,183)
  Increase (decrease) in accrued salaries                                     198,713         196,650          187,750
  Increase (decrease) in accrued legal fees                                                    12,138            6,518
                                                                        ---------------------  ------  --------  -----
                                                                                    0
  Total adjustments                                                           178,593        (46,087)          150,699
                                                                        ----- -------  ---   --------  ----    -------
  Net cash provided by (used in) operating activity                           164,212        (81,973)          107,528

Investing activities:
  Investment in mining resources                                          (2,061,426)     (1,003,527)      (1,638,682)
                                                                          -----------     -----------      -----------
  Total                                                                   (2,061,426)     (1,003,527)      (1,638,682)

Financing activities:
  Net borrowings                                                            1,394,958         575,177        1,347,174
  Common stock issued                                                         504,600         499,246          198,660
                                                                        ----  -------  ----   -------  ----    -------
Net cash provided by (used in) financing activities                         1,899,558       1,074,423        1,545,834

Net increase (decrease) in cash and cash equivalents                            2,344        (11,077)           14,680
Cash - beg. of year                                                            28,004          39,081           24,401
                                                                        ------ ------  ------  ------  ------   ------
Cash - end of year                                                        $    30,348     $    28,004      $    39,081
                                                                          ===========     ===========      ===========

</TABLE>
  The accompanying  notes are an integral part of these  consolidated  financial
 statements.



<PAGE>


                   COMMERCE GROUP CORP., ITS SUBSIDIARIES, AND THE JOINT VENTURE
                                Consolidated Statements of Cash Flows, continued

Supplemental disclosures of cash information:

<TABLE>
<CAPTION>
                                   Year Ended
                                                          March 31, 2004               March 31, 2003
                                                          --------------               --------------
A.  Cash information                                  Shares       $ Amount        Shares        $ Amount
<S>    <C>                                              <C>       <C>                <C>        <C>
       1.  Accrued interest capitalized                 0         $1,433,298         0          $1,212,976
       2.  Interest expense paid in cash                0             0              0              0
       3.  Income taxes paid                            0             0              0              0

B.  Non cash investing and financing
      Common stock issued for:
       1.  Director fees, officer compensation,
            employee benefits and services           630,862       $155,100       693,221        $155,170
       2.  Accruals:  salaries, legal and
            consulting fees                             0          234,789           0           244,788
       3.  Equipment lease or purchases                 0             0              0              0

C.   Other supplemental disclosures
</TABLE>

     1.  Investments  consist of securities held by Commerce for the Commerce
 Group Corp.  Employee  Benefit  Account,  which are stated at cost. Also
 included
         are the precious stones and jewelry inventory stated at cost.

     2.  The accounts  receivable  consist of advances to Mineral San Sebastian
 S.A.  (Misanse),  which is 52% owned by the Company.  These advances will be an
         offset for the Misanse rental charges that are included in the
 accounts payable.

     3.  Inventory consists of consumable items used in processing gold ore,
which are stated at the average cost.





 The  accompanying  notes are an integral part of these  consolidated  financial
statements.


<PAGE>


                  COMMERCE GROUP CORP., ITS SUBSIDIARIES, AND THE JOINT VENTURE
                                 Notes to the Consolidated Financial Statements
                                                                March 31, 2004

(1)  The Company and Basis of Presentation of Financial Statements

(a)   Commerce Group Corp.  ("Commerce," the "Company" and/or  "Registrant")
and its 82 1/2%-owned  subsidiary,  San Sebastian Gold Mines, Inc. ("Sanseb")
both
      United States' corporations, have formed the Commerce/Sanseb Joint Venture
 ("Joint Venture") for the purpose of performing gold mining and
related
      activities,  including, but not limited to, exploration,  exploitation,
development,  extraction and processing of precious metals in the Republic of El
      Salvador,  Central  America.  Gold bullion,  currently the Joint
Venture's  principal  product,  was produced (but not on a full production
 basis) in El
      Salvador and refined and sold in the United  States.  Expansion of
 exploration  is a goal at the San Sebastian  Gold Mine ("SSGM") which is
located near
      the city of Santa Rosa de Lima.  Expanded  exploration is being
 curtailed at other mining projects until adequate funding is obtained under
  satisfactory
      terms and conditions.  All of the mining projects are located in the
Republic of El Salvador, Central America.

      On March 3, 2003,  the  Company  received  an  exploration  license  dated
February 24, 2003, for the exploration of minerals in an area encompassing
 the
      SSGM,  consisting of 42 square kilometers,  which is hereafter referred to
 as the "New SSGM Exploration Concession/License" or the "New SSGM." This
      expanded area provides the Company with an  opportunity to increase its
 gold and silver ore reserves. Included in this area are three formerly-operated
      gold and silver mines:  the La Lola Mine, the Santa Lucia Mine and the
 Tabanco Mine.

      As of March 31, 2000 the Joint Venture had  temporarily  suspended the San
 Cristobal Mill and Plant ("SCMP") operations (operations ceased on December
      31,  1999)  until  such  time  as  it  has  adequate  funds  to  retrofit,
 rehabilitate, restore and expand these facilities and until there is
certainty that the
      price of gold will be stabilized at the current or a higher selling price.

      The Joint Venture plans to begin its  open-pit,  heap-leaching  process on
the SSGM site when adequate funding becomes available, and if the price of gold
      maintains the current price level. It also plans to continue its SSGM
site preparation,  the expansion of its exploration and exploitation  targets,
 and
      the enlargement  and development of its gold ore reserves.  Furthermore,
 it plans to explore the potential of other gold mine  exploration  prospects in
      El  Salvador.  Concurrently,  it is in the  process of  obtaining
 necessary  funding  for each of these  separate  programs  while its Joint
 Venture is
      performing minor retrofit and rehabilitation work at the SCMP.  It
commenced an exploration program on the New SSGM.

(b)   Basis of presentation:

      Management estimates and assumptions:

      Certain  amounts   included  in  or  affecting  the  Company's   financial
statements and related disclosures must be estimated, requiring that certain
      assumptions  be made with respect to values or conditions  which cannot be
 made with certainty at the time the financial statements are prepared.
      Therefore,  the reported  amounts of the Company's assets and liabilities,
  revenues and expenses, and associated disclosures with respect to contingent
      assets and obligations are necessarily  affected by these  estimates.
 The Company  evaluates these estimates on an ongoing basis,  utilizing
 historical
      experience,  consultation  with experts, and other methods considered
  reasonable in the  particular  circumstances. Nevertheless, actual results may
      differ significantly from the Company's estimates.



<PAGE>


                   COMMERCE GROUP CORP., ITS SUBSIDIARIES, AND THE JOINT VENTURE
                     Notes to the Consolidated Financial Statements (Continued)
                                                                March 31, 2004


(2)  Significant Accounting Policies

Consolidated Statements

The Joint Venture and the  following  subsidiaries  are all  majority-owned  by
 the Company and are included in the  consolidated  financial  statements of the
Company.  All significant intercompany balances and transactions have been
 eliminated.

<TABLE>
<CAPTION>
                                                                                  Charter/Joint Venture
                                                            % Ownership           Place             Date
<S>                       <C>                                    <C>                           <C>   <C>
Homespan Realty Co., Inc. ("Homespan")                           100.0       Wisconsin         02/12/1959
Mineral San Sebastian, S.A. de C.V.  ("Misanse")                  52.0       El Salvador       05/08/1960
Ecomm Group Inc. ("Ecomm")                                       100.0       Wisconsin         06/24/1974
San Luis Estates, Inc. ("SLE")                                   100.0       Colorado          11/09/1970
San Sebastian Gold Mines, Inc. ("Sanseb")                         82.5       Nevada            09/04/1968
Universal Developers, Inc.  ("UDI")                              100.0       Wisconsin         09/28/1964
Commerce/Sanseb Joint Venture ("Joint Venture")                   90.0       Wisconsin &       09/22/1987
                                                                             El Salvador
</TABLE>

Investments

The investments  consist of recently  acquired  securities held for the Commerce
Group Corp. Employee Benefit Account, and are stated at cost.
 The precious
stones included in the investment account are stated at cost.

Accounts Receivable

The  accounts  receivable  primarily  consists of the  advances  to  Misanse,  a
 52%-owned subsidiary, which will be offset for the Misanse rental charges
included
in the accounts payable.

Intercompany Balances

All significant intercompany balances and transactions have been eliminated.

Inventory

Inventory consists of consumable supplies and are stated at cost, which is lower
than the market value.

Deferred Mining Costs

The Company,  in order to avoid expense and revenue  unbalance,  capitalizes all
costs directly  associated  with  acquisition,  exploration  and  development of
specific properties,  until these properties are put into operation, sold or are
abandoned.  Gains or losses  resulting  from the sale or  abandonment  of mining
properties will be included in operations. The Joint Venture capitalizes
 its costs and expenses and will write off these  cumulative  costs on a units
 of
production  method at such time as it begins  producing  gold  derived  from the
virgin gold ore on a full production  basis. If the prospect of gold production,
due to different  conditions and circumstances  becomes  unlikely,  all of these
costs may be written off in the year that this occurs.

The Company regularly evaluates its carrying value of exploration  properties in
 light of their potential for economic mineralization and the likelihood of
continued  work by either the Company or a joint  venture  partner.  The Company
may, from time to time, reduce its carrying value to an amount that approximates
fair market value based upon an assessment of such criteria.

Revenue Recognition

Revenue from the sale of gold is recognized  when  delivery has occurred,  title
and risk of loss passes to the buyer, and collectability is reasonably  assured.
Gold sales are made in accordance with sales contracts where the price
 is fixed or determinable.

Property, Plant and Equipment

Property,  plant,  and  equipment  is stated at the lower of cost or  estimated
  net  realizable  value.  Mining  properties,  development  costs and plant and
equipment  will be  depreciated  when full  production  takes place using the
 units of  production  method based upon proven and probable  reserves.  Until
 the
Company suspended its mining  operations,  the assets were depreciated using the
straight-line  method over  estimated  useful  lives  ranging  from three to ten
years. Depreciation and amortization expenses include the amortization
 of  assets  acquired,  if any,  under  capital  leases.  Replacements and major
improvements are  capitalized.  When in operation,  maintenance and repairs
 will be charged to expense based on average estimated equipment usage. Interest
costs  incurred in the  construction  or  acquisition  of property,  plant,  and
equipment are  capitalized  and  amortized  over the useful lives of the related
assets.  Since the Company suspended its gold processing  operations as of March
31, 2000, it also ceased to depreciate its fixed assets.

Mineral Exploration and Development Costs

Significant property acquisition payments for active exploration  properties are
capitalized. If no minable ore body is discovered,  previously capitalized costs
are  expensed in the period the  property  is  abandoned.  Expenditures  for the
development of new mines,  to define further  mineralization  at and adjacent to
existing ore bodies, and to expand the capacity of operating mines, are
 capitalized  and  amortized  on the units of  production  basis over proven and
probable reserves.

Recently Issued Accounting Standards

In August 2001,  the FASB issued SFAS No. 143,  "Accounting  for Asset
 Retirement  Obligations,"  which  addresses  financial  accounting  and
 reporting  for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs.  This Statement  requires that the fair value
of a liability for an asset retirement obligation be recognized in the period in
which it is incurred  if a  reasonable  estimate of fair value can be made.  The
associated asset retirement costs are capitalized as part of the carrying amount
of the long-lived asset. All provisions of this Statement will be effective when
the occurrence arises. At this time, the Company
 believes  that the  adoption of SFAS No. 143 should not have a material
 impact on the
Company's results of operations or financial position.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal  of  Long-Lived  Assets."  This  Statement  supersedes  SFAS  No.  121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of" and amends APB No. 30,  "Reporting  the Effects of Disposal of a
Segment of a Business,  and  Extraordinary,  Unusual and Infrequently  Occurring
Events and  Transactions."  This Statement  requires that long-lived assets that
are to be  disposed  of by sale be  measured  at the lower of book value or fair
value less costs to sell. SFAS No. 144 retains the fundamental provision of SFAS
121 for (a) recognition  and measurement of the impairment of long-lived  assets
to be held and used and (b)  measurement of long-lived  assets to be disposed of
by sale.  This  statement also retains APB No. 30's  requirement  that companies
report  discontinued  operations  separately  from  continuing  operations.  All
provisions of this statement are effective in the first quarter of 2003. At this
time,  the  Company  believes  that the impact of this  standard  should have no
material impact on the financial statements taken as a whole.

In December  2002,  the Financial  Accounting  Standards  Board issued
Financial  Accounting  Standards No. 148,  Accounting  for  Stock-Based
Compensation -
Transition and Disclosure (SFAS No. 148). SFAS No. 148, amends SFAS No. 123,
 Accounting for Stock-Based Compensation (SFAS No. 123), to provide alternative
methods of transition for a voluntary  change to the fair value based method
 of accounting for stock-based  employee  compensation.  In addition,  SFAS
No. 148
amends the  disclosure  requirement  of SFAS No. 123 to require  prominent
 disclosures  in both annual and interim  financial  statements  about the
 method of
accounting  for  stock-based  employee  compensation  and the effect of the
 method used on reported  results.  The amendments to SFAS No. 123 are
effective for
financial  statements  for fiscal years ending after  December 15, 2002. As the
 Company  accounts for  stock-based  employee  compensation  using the intrinsic
value method in accordance  with APB No. 25,  Accounting for Stock Issued to
 Employees,  the Company has adopted the disclosure  requirements  of SFAS No.
 148,
effective April 1, 2003.

Management's  estimates of gold and other metal prices,  recoverable  proven and
probable  reserves,  operating,  capital,  and reclamation  costs are subject to
certain  risks and  uncertainties  which may  affect the  recoverability  of the
Company's investment in property, plant, and equipment.  Although management has
made its best  estimate  of these  factors  based on current  conditions,  it is
reasonably  possible  that  changes  could  occur in the  near-term  which could
adversely  affect  management's  estimate  of the net cash flows  expected to be
generated from its mining properties.

Estimates  of future  cash flows are subject to risks and  uncertainties.  It is
possible  that  changes  could  occur  which may  affect the  recoverability  of
property, plant and equipment.

Deferred Financing Costs

Costs incurred to obtain debt financing are  capitalized  and amortized over the
life of the debt facilities using the effective interest method.

Interest Capitalization

Interest costs are  capitalized as part of the historical cost of facilities and
equipment, if material.

Income Taxes

The Company files a consolidated federal income tax return with its subsidiaries
(See Note 9). The Joint Venture files a U.S. partnership return.

Comprehensive Income

Effective April 1, 1999, the Company adopted  Statement of Financial  Accounting
Standards  No.  130 (SFAS  130),  Reporting  Comprehensive  Income.  SFAS 130 is
designed  to report a measure  of all  changes in equity of an  enterprise  that
result from  recognized  transactions  and other economic  events of the period.
Besides net income,  other comprehensive income includes foreign currency items,
minimum  pension  liability  adjustments,  and  unrealized  gains and  losses on
certain investments in debt and equity securities.  The Company believes that it
has no material items or other  comprehensive  income in any period presented in
the accompanying financial statements.

Earnings  (Loss) Per Common Share

The  Company  has in the past years  reported  its  "Earnings  per Share"  which
presently  complies  with the  provisions  of Statement of Financial  Accounting
Standards  No. 128 (SFAS No.  128).  As required by this  standard,  the Company
reports two earnings per share amounts,  basic net income and diluted net income
per share.  Basic net income per share is computed  by  dividing  income or loss
reportable to common shareholders (the numerator) by the weighted average number
of common shares outstanding (the  denominator).  The computation of diluted net
income or loss per share is similar to the  computation  of basic net income per
share except that the denominator is increased to include the dilutive effect of
the additional common shares that would have been outstanding if all convertible
securities,  stock  options,  rights,  share loans,  etc. had been  converted to
common  shares  at the last day of the  fiscal  year.  Reference  is made to the
computations included in the Consolidated Statements of Operations.

If on March 31,  2004,  the 210,000  option  shares  were added to the  weighted
number  of  shares  which  amount  to   21,089,812   common  shares  issued  and
outstanding, then the total number of fully diluted shares amount to 21,299,812.
The loss per share for this  period  ended  March 31,  2004 is $.0007  cents per
share. The same assumptions were used for the same 2003 fiscal period.

Foreign Currency

The Company conducts the majority of its operations in the Republic of El
Salvador,  Central America.  Currently,  El Salvador is on the U.S. dollar
 system and
therefore all receipts and expenditures since January 1, 2001 are in U.S.
dollars.

Major Customer

In the past, the Joint Venture produced gold and silver. It sold its gold at the
world market price to a refinery located in the United States.  Given the nature
of the precious  metals that are sold, and because many potential  purchasers of
gold and silver exist,  it is not believed  that the loss of any customer  would
adversely affect either the Company or the Joint Venture.

(3) Investment in Property, Plant, Equipment  and Mining Resources

The  following is a summary of the  investment  in property,  plant,  equipment,
mining resources and development costs:
<TABLE>
<CAPTION>

                                           March 31, 2004                                    March 31, 2003
                           --------------------------------------------------------------------------------------------------------
                                            Accumulated                                       Accumulated
                               Cost         Depreciation         Net            Cost          Depreciation          Net
Mineral   Properties  and
<S>                        <C>                              <C>             <C>                                <C>
Deferred Development       $30,111,891                      $30,111,891     $28,035,169                        $28,035,169

Property, Plant and
Equipment                      6,541,095      2,252,143         4,288,952       6,533,055       2,252,143          4,280,912
                           -------------  --  ---------     -------------   -------------  --   ---------      -------------
                           $36,652,986       $2,252,143     $34,400,843     $34,568,224        $2,252,143      $32,316,081
                           ===========       ==========     ===========     ===========        ==========      ===========
</TABLE>

Vehicles, office, mining and laboratory equipment, buildings, etc. are stated at
cost and are depreciated  using the  straight-line  method over estimated useful
lives of three to ten years.  Maintenance  and repairs are charged to expense as
incurred. Since the Joint Venture suspended operations in view of the weak price
of gold  and the need to  expand  these  facilities,  no  depreciation  has been
recorded during this fiscal year.

Impairments

The Company  evaluates  the carrying  value of its  properties  and equipment by
applying the provisions of Statement of Financial  Accounting  Standards No. 121
(SFAS  121),  Accounting  for  the  Impairment  of  Long-Lived  Assets  and  for
Long-Lived  Assets to be Disposed  of.  Estimated  future net cash flows,  on an
undiscounted   basis,   from  each  property  are  calculated   using  estimated
recoverable ounces of gold (considering current proven and probable reserves and
mineral resources expected to be converted into mineral reserves.  The inclusion
of  mineral  resources  is based on  various  circumstances,  including  but not
limited to, the  existence and nature of known  mineralization,  location of the
property,   results  of  drilling;  and  analysis  to  demonstrate  the  ore  is
commercially recoverable),  estimated future gold price realization (considering
historical and current prices, price trends and related factors); and operating,
capital and site restoration costs. Reduction in the carrying value of property,
plant and equipment,  with a corresponding charge to income, are recorded to the
extent  that the  estimated  future  net cash  flows are less than the  carrying
value.

(4) Commerce/Sanseb Joint Venture ("Joint Venture")

The  Company  is in a joint  venture  with and owns 82 1/2% of the total  common
stock  (2,002,037  shares) of Sanseb,  a U.S. State of Nevada  chartered  (1968)
corporation.  The  balance  of  Sanseb's  stock  is  held by  approximately  180
non-related shareholders,  including the President of the Company who owns 2,073
common  shares.  Sanseb was formed in 1968 to explore,  exploit,  research,  and
develop  adequate gold  reserves.  Sanseb  produced gold from the SSGM from 1972
through February 1978.

On September  22,  1987,  the Company and Sanseb  entered  into a joint  venture
agreement to formalize their relationship with respect to the mining venture and
to account for the Company's  substantial  investment in Sanseb. Under the terms
of the agreement,  the Company is authorized to supervise and control all of the
business  affairs of the Joint  Venture and has the  authority to do all that is
necessary  to  resume  mining  operations  at the SSGM on  behalf  of the  Joint
Venture.  The net pre-tax  profits of the Joint Venture will be  distributed  as
follows:  Company  90%;  and Sanseb 10%.  Since the Company  owns 82 1/2% of the
authorized  and issued  shares of Sanseb,  the  Company in effect has over a 98%
interest in the Joint Venture activities.

The joint venture  agreement  further provides that the Company has the right to
be compensated  for its general and  administrative  expenses in connection with
managing the Joint Venture.

Under the joint  venture  agreement,  agreements  signed by the  Company for the
benefit of the Joint Venture create obligations binding upon the Joint Venture.

The Joint  Venture is registered to do business in the State of Wisconsin and in
the Republic of El Salvador, Central America.




Investments in Joint Venture

As of March 31, 2004, the Company's investments,  including charges for interest
expense  to the Joint  Venture,  were  $44,295,125  and  three of the  Company's
subsidiaries' advances were $590,265 for a total of $44,885,390.

Investment in El Salvador Mining Projects

During the fiscal year, the Company has advanced funds,  performed services, and
allocated its general and administrative costs to the Joint Venture.

As of March 31, 2004 and 2003,  the Company,  Sanseb and three of the Company's
  subsidiaries  have invested  (including  carrying  costs) the following in its
Joint Venture:
<TABLE>
<CAPTION>

                                                                                       2004            2003
                                                                                       ----            ----
<S>                                                      <C>   <C>                  <C>             <C>
The Company's advances (net of gold sale proceeds) since 09/22/87                   $44,295,125     $40,181,015
The Company's initial investment in the Joint Venture                                 3,508,180       3,508,180
Sanseb's investment in the Joint Venture                                              3,508,180       3,508,180
Sanseb's investment in the mining projects and amount due to the Company
                                                                                     36,340,906      34,160,023
Total:                                                                               87,652,391      81,357,398
Advances by the Company's three subsidiaries                                            590,265         590,265
                                                                                ------- -------  --------------
Combined total investment                                                           $88,242,656     $81,947,663
                                                                                    ===========     ===========
</TABLE>

SSGM Activity

The Company had no  significant  activity  at the SSGM site from  February  1978
through  January 1987. The present  status is that,  the Company,  since January
1987, and  thereafter,  the Joint Venture,  since September 1987, have completed
certain of the required mining pre-production  preliminary stages in the minable
and proven gold ore reserve  area,  and the Company is active in  attempting  to
obtain adequate financing for the proposed open-pit, heap-leaching operations at
the SSGM.  The Joint  Venture  plans to resume  its  exploration  and  expansion
program to develop  additional  gold ore  reserves in the area  surrounding  the
minable gold ore reserves.  Presently,  it is erecting its cone crushing  system
and performing minor rehabilitation repairs to its San Cristobal Mill and Plant.
On March 3,  2003,  the  Company  received  the New SSGM  from the  Ministry  of
Economy's  Director of El Salvador  Department of  Hydrocarbons  and Mines (DHM)
which  includes  and  encompasses  the existing  SSGM,  and is in the process of
exploring three of the formerly operated gold mines.

Mineral San Sebastian S.A. de C.V. ("Misanse")

(a)  Misanse Corporate Structure

The SSGM real estate is owned by and leased to the Joint  Venture by Misanse,  a
Salvadoran-chartered corporation. The Company owns 52% of the total of Misanse's
issued and  outstanding  shares.  The balance is owned by  approximately  100 El
Salvador, Central American, and United States' citizens.

(b)  SSGM Mining Lease

On January 14, 2003,  the Company  entered  into an amended and renewed  30-year
lease agreement with Mineral San Sebastian  Sociedad Anomina de Capital Variable
(Misanse)  pursuant  to the  approval of the  Misanse  shareholders  and Misanse
directors  at a meeting  held on January 12,  2003.  The renewed  lease is for a
period of thirty (30) years commencing on the date that the Company received its
Renewed San Sebastian  Gold Mine  Exploitation  Concession/License,  hereinafter
identified  as the  "Renewed  SSGM,"  from the DHM.  The lease is  automatically
extendible  for one or more equal  periods.  The Company will pay to Misanse for
the rental of this real  estate the sum of five  percent of the net sales of the
gold and silver produced from this real estate, however, the payment will not be
less than  $343.00  per month.  The  Company  has the right to assign this lease
without  prior  notice or  permission  from  Misanse.  This  lease is pledged as
collateral for loans made to related parties (Note 7).

(c)  Mineral Concessions/Licenses

Renewed San Sebastian Gold Mine Exploitation  Concession/License (Renewed SSGM)
 - approximately 1.2306 square kilometers,  Department of La Union, El Salvador,
Central America

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 a
twenty-year  Renewed  SSGM which was dated  August 18,  2003.  This Renewed SSGM
replaces the collateral that the same parties held with the previous concession.

New SSGM Exploration Concession/License (New SSGM) - approximately 40.7694
square kilometers

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
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. 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.

Nueva Esparta Exploration Concession/License (Nueva Esparta) - 45 square
kilometers

On or about October 20, 2002, the Company filed an application  with the DHM for
the Nueva Esparta,  which consists of 45 square kilometers north and adjacent to
the New SSGM. 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 Grande Mine, the Las Pinas
Mine, the Oro Mine,  the Montemayor  Mine, the Banadero Mine, the Carrizal Mine,
the La Joya  Mine  and the  Copetillo  Mine.  The  application  was  denied  and
presently is being appealed by the Company.

El Salvador Mineral Production Fees

As of July 2001, a series of  revisions  to the El Salvador  Mining Law offer to
make exploration more economical.  The principal change is that the fee has been
reduced  to two  percent  of the gross gold and  silver  receipts.  The  Company
believes  that  it is in  compliance  with  the  new  law,  and  plans  to  file
applications for all of the mining concessions in which it has an interest.

SCMP Land and Building Lease

On  November  12,  1993,  the  Joint  Venture  entered  into an  agreement  with
Corporacion   Salvadorena   de   Inversiones   ("Corsain"),   an  El  Salvadoran
governmental agency, to lease for a period of ten years, approximately 166 acres
of land and  buildings  on which its gold  processing  mill,  plant and  related
equipment (the SCMP) are located,  and which is  approximately  15 miles west of
the SSGM site. The basic annual lease payment was U.S. $11,500, payable annually
in advance, unless otherwise amended, and subject to an annual increase based on
the annual United States'  inflation rate. As agreed, a security deposit of U.S.
$11,500  was paid on the same date and this  deposit  was  subject to  increases
based on any United States' inflationary rate adjustments.

On April 26, 2004, a three-year  lease,  which includes an automatic  additional
three-year  extension subject to Corsain's  review,  was executed by and between
Corsain and the Company.  This lease is retroactive to November 12, 2003 and the
monthly lease payments are $1,418.51 plus the El Salvadoran added value tax. The
lease is subject to an annual  increase  based on the U.S.  annual  inflationary
rate  adjustments.  The SCMP is strategically  located to process ore from other
mining projects.

Modesto Mine

Real Estate

The Company  owns 63 acres of land which are a key part of the Modesto Mine that
is located near the city of El Paisnal, El Salvador. This real estate is subject
to a  mortgage  and  promissory  note and is pledged  as  collateral  to certain
parties described in Note 7.

San Felipe-El Potosi Mine ("Potosi")

Real Estate Lease Agreement

The Joint Venture entered into a lease  agreement with the San Felipe-El  Potosi
Cooperative  ("Cooperative") of the city of Potosi, El Salvador on July 6, 1993,
to lease the real estate encompassing the San Felipe-El Potosi Mine for a period
of 30 years and with an option  to renew the lease for an  additional  25 years,
for the purpose of mining and extracting minerals.

Montemayor Mine

The Joint Venture has leased  approximately  175 acres of land that it considers
to be the key mining property. The terms of the various leases are one year with
automatic  renewal  rights.  This property is located 14 miles  northwest of the
SCMP,  six miles  northwest of the SSGM, and about two miles east of the city of
San Francisco Gotera in the Department of Morazan, El Salvador.


(5)  Synopsis of Real Estate Ownership and Leases

The  Company's  52%-owned  subsidiary,  Misanse,  owns the 1,470  acre SSGM site
located near the city of Santa Rosa de Lima in the  Department  of La Union,  El
Salvador.  Other real estate  ownership or leases in El Salvador are as follows:
the  Company  owns  approximately  63 acres at the Modesto  Mine;  and the Joint
Venture  leases  the SCMP  land and  buildings  on which  its  mill,  plant  and
equipment are located.  In addition,  the Joint Venture has entered into a lease
agreement  to lease  approximately  675 acres  based on the  production  of gold
payable in the form of royalties with a mining prospect in the Department of San
Miguel and it previously  leased  approximately  175 acres in the  Department of
Morazan  in  the  Republic  of  El  Salvador.  The  Company  also  leases  on  a
month-to-month  basis  approximately  4,032  square  feet  of  office  space  in
Milwaukee, Wisconsin.

(6)  Notes Payable and Accrued Interest
<TABLE>
<CAPTION>

                                                                                           03/31/04           03/31/03
Related Parties

Mortgage and  promissory  notes to related  parties,  interest  ranging from one
percent to four percent over prime rate, but not less than 16%, payable monthly,
due on demand,  using the Misanse lease,  real estate and all other assets owned
by the Company, its subsidiaries and the Joint Venture as collateral. (Note 7)
<S>                                                                                      <C>                <C>
                                                                                         $9,400,682         $8,027,380
Other

Short-term  notes and accrued  interest (March 31, 2004,  $112,578 and March 31,
2003, $90,922) issued to creditors and other non related parties, interest rates
of varying amounts, in lieu of actual cash payments and includes a mortgage on a
certain parcel of land pledged as collateral located in El Salvador.
                                                                                            247,579            225,922
                                                                                   -----    -------   -----    -------

                                                                          Total:         $9,648,261         $8,253,302
</TABLE>

(7)  Related Party Transactions

The Company,  in an attempt to preserve  cash, had prevailed on its President
to accrue his salary for the past 23 years, including vacation pay, for a total
of $2,815,265.

In addition,  with the consent and approval of the  Directors,  the President of
the Company,  as an individual  and not as a Director or Officer of the Company,
entered into the following financial  transactions with the Company,  the status
of which is reflected as of March 31, 2004:

The amount of cash funds which the Company has borrowed from its President  from
time to time, together with accrued interest, amounts to $6,565,817. To evidence
this debt,  the  Company  has issued to its  President  a series of  open-ended,
secured,  on-demand promissory notes, with interest payable monthly at the prime
rate plus two percent, but not less than 16% per annum.

The Company had borrowed an aggregate of $915,066,  including  accrued interest,
from the  Company's  President's  Rollover  Individual  Retirement  Account (ELM
RIRA). These loans are evidenced by the Company's open-ended, secured, on-demand
promissory  note,  with  interest  payable  monthly  at the prime rate plus four
percent per annum, but not less than 16% per annum.

On  December  17,  2003,  in order to reduce the  Company's  debt and to provide
liquidity  to the ELM RIRA,  the  Company  sold to the ELM RIRA,  200,000 of its
restricted  common  shares at a price of $.25 each for a total of  $50,000.  The
sale  price of the  common  shares was no less  favorable  than the sales  price
negotiated with unrelated third parties.

In order to satisfy  the  Company's  cash  requirements  from time to time,  the
Company's  President has sold or pledged as collateral for loans,  shares of the
Company's  common stock owned by him. In order to  compensate  its President for
selling or pledging his shares on behalf of the Company,  the Company has made a
practice  of  issuing  him the  number of  restricted  shares  of  common  stock
equivalent to the number of shares sold or pledged, plus an additional number of
shares equivalent to the amount of accrued interest calculated at the prime rate
plus three percent per annum and payable  monthly.  The Company  receives all of
the net cash  proceeds  from the sale or from the  pledge of these  shares.  The
Company did not borrow any common  shares  during this  fiscal  year.  The share
loans,  if  any,  are  all in  accordance  with  the  terms  and  conditions  of
Director-approved,  open-ended loan agreements dated June 20, 1988,  October 14,
1988, May 17, 1989, and April 1, 1990.

On February 16, 1987, the Company granted its President, by unanimous consent of
the Board of Directors, compensation in the form of a bonus in the amount of two
percent of the pre-tax  profits  realized  by the  Company  from its gold mining
operations  in El  Salvador,  payable  annually  over a period of  twenty  years
commencing  on the  first  day of the month  following  the month in which  gold
production commences.

The President,  as an individual,  and not as a Director or Officer of the
Company,  presently owns a total of 467 Misanse common shares.  There are a
total of
2,600 Misanse shares issued and outstanding.

Also with the consent  and  approval  of the  Directors,  a company in which the
President  has a 55%  ownership,  General  Lumber & Supply  Co.,  Inc.  (GLSCO),
entered into the following  agreements,  and the status is reflected as of March
31, 2004:

The Company leased approximately 4,032 square feet on a month-to-month basis for
its corporate  headquarters'  office;  the monthly rental charge was $2,789. The
same related company provides administrative  services, use of its vehicles, and
other property, as required by the Company.

In lieu of cash  payments for the office  space  rental and for the  consulting,
administrative  services,  etc.,  these amounts due are added each month to this
related company's open-ended,  secured,  on-demand promissory note issued by the
Company.

In addition,  this related  company does from time to time use its credit
facilities  to purchase  items needed for itself or for the Joint  Venture's
 mining
needs.

This related company has been issued an open-ended,  secured,  on-demand
 promissory note which amounts to $1,262,390;  the annual interest rate is
four percent
plus the prime rate, but not less than 16%, and it is payable monthly.

On June 30, 2001, GLSCO purchased 250,000 restricted common shares at a price of
$.15 per share and it received  options to purchase  250,000 common shares on or
before  July 2, 2003,  at a price of $.25 per  share.  On June 24,  2003,  GLSCO
exercised  its  option  right  to  purchase  these  shares.  The  terms  of this
transaction  are no less  favorable  than those  obtained from  unrelated  third
parties.

On December 17, 2003, in order to reduce debt, and in  consideration  for
 cancellation of $115,900 of debt owed to GLSCO, the Company sold to GLSCO
436,600 of
its restricted common shares, $.10 par value, at a price of $.25 a share.

The Company's  Directors have consented and approved the following  transactions
of which the status of each are reflected as of March 31, 2004:

The President's wife's Rollover Individual  Retirement Account (SM RIRA) has the
Company's open-ended,  secured, on-demand promissory note in the sum of $503,581
which bears interest at an annual rate of prime plus three percent, but not less
than 16% and the interest is payable monthly.

The  Directors  also have  acknowledged  that the wife of the President is to be
compensated  for her  consulting  fees due to her from October,  1, 1994 through
September 30, 2000 or 72 months at $2,800 a month,  and thereafter at $3,000 per
month.  The Company owes her as an individual  and as a  consultant,  the sum of
$327,600 for services rendered from October 1994.

The Law Firm which  represents  the Company in which a son of the President is a
principal  is owed the sum of  $327,015  for  1,767.65  hours of legal  services
rendered  from July 1980  through  March 31,  2004.  By agreement on the date of
payment,  these fees are to be  adjusted  to  commensurate  with the hourly fees
charged by the Law Firm.

The son of the President and his son's wife have the Company's  open-ended,
on-demand promissory note in the sum of $153,828 which bears interest at an
 annual
rate of 16% payable monthly.

The Directors, by their agreement,  have deferred cash payment of their Director
fees beginning on January 1, 1981,  until such time as the Company's  operations
are profitable. Effective from October 1, 1996, the Director fees are $1,200 for
each quarterly meeting and $400 for attendance at any other Directors'  meeting.
The Executive  Committee Director fees are $400 for each meeting.  The Directors
and  Officers  have an option to receive  cash at such time as the  Company  has
profits and an adequate cash flow, or to exchange the amount due to them for the
Company's  common  shares.  The Directors and Officers of the Company  exercised
their option to receive a total of 101,110  common shares valued at $.27 a share
in lieu of any cash  compensation  for all  amounts  due to them as of March 31,
2004.  In  addition,  during this  period one  Director  received  39,752 of the
Company's  common  shares  for  consulting  services  valued  at  $10,200.   The
Chairman/President does not receive any Director fees.

The Company  advances  funds,  allocates  and charges its  expenses to the Joint
Venture. The Joint Venture in turn capitalizes all of these advances,  costs and
expenses.  When full  production  commences,  these  capitalized  costs  will be
charged as an expense  based on a per unit  production  basis.  The Company also
charges  interest for its advances to the Joint Venture  which  interest rate is
established to be the prime rate quoted on the first day of each month plus four
percent and said interest is payable  monthly.  This interest is eliminated from
the  consolidated  statement of operations.  However,  a separate  accounting is
maintained  for the purpose of  recording  the amount that is due to the Company
from the Joint Venture.






Company Net Advances to the Joint Venture
<TABLE>
<CAPTION>
                                                           2004                                   2003
                                                           ----                                   ----
                                                                Interest Charges                       Interest Charges
                                             Total Advances                         Total Advances
<S>                                            <C>                <C>                 <C>                <C>
Beginning balances                             $40,181,015        $23,751,735         $36,729,923        $20,448,289
March 31, 2004 advances                          4,114,110           3,448,432           3,451,092          3,303,446
                                           ---   ---------      ---- ---------    ----   ---------     ---- ---------
Total Company advances                          44,295,125          27,200,167         40,181,015          23,751,735
Advances by three of the Company's
subsidiaries                                        590,265                                590,265
                                           -------  -------     -------------------------  -------
                                                                       0                                      0
                                                                       -                                      -
Total net advances March 31, 2004              $44,885,390        $27,200,167         $40,771,280        $23,751,735
                                               ===========        ===========         ===========        ===========
</TABLE>

(8)  Commitments

Reference is made to Notes 2, 4, 5, 6, 7, 10 and 12.

(9)  Income Taxes

At March  31,  2003,  the  Company  and its  subsidiaries,  excluding  the Joint
Venture, have estimated net operating losses remaining in a sum of approximately
$5,063,150 which may be carried forward to offset future taxable income; the net
operating losses expire at various times to the year of 2018.

(10)  Description of Securities

a.  Common Stock

The Company's  Wisconsin  Certificate of Incorporation  effective as of April 1,
1999  authorizes  the issuance of 50,000,000  shares of common stock,  $0.10 par
value per share of which  22,681,591  shares were issued and  outstanding  as of
March 31,  2004.  Holders of shares of common stock are entitled to one vote for
each share on all matters to be voted on by the shareholders.  Holders of common
stock have no cumulative  voting  rights.  Holders of shares of common stock are
entitled to share ratably in dividends, if any, as may be declared, from time to
time by the Board of Directors in its discretion,  from funds legally  available
therefore.  In the event of a  liquidation,  dissolution  or  winding  up of the
Company,  the holders of shares of common  stock are  entitled to share pro rata
all assets remaining after payment in full of all liabilities. Holders of common
stock have no preemptive  rights to purchase the Company's  common stock.  There
are no conversion  rights or redemption or sinking fund  provisions with respect
to the common stock.  All of the issued and  outstanding  shares of common stock
are validly issued, fully paid and non-assessable.

b.  Preferred Stock

There were no preferred  shares issued and  outstanding  for the periods  ending
March 31, 2004 or 2003.

The Company's Wisconsin Certificate of Incorporation  authorizes the issuance of
250,000 shares of preferred stock, $0.10 par value.

The preferred shares are issuable in one or more series. If issued, the Board of
Directors is authorized to fix or alter the dividend rate, conversion rights (if
any), voting rights,  rights and terms of redemption (including any sinking fund
provisions),  redemption price or prices,  liquidation preferences and number of
shares constituting any wholly unissued series of preferred shares.

c.  Stock option activity:
<TABLE>
<CAPTION>

                                     03/31/04                    03/31/03                    03/31/02
                             ------------------------------------------------------------------------------------
                                            Weighted                    Weighted                    Weighted
                                  Option     Average         Option     Average     Option Shares    Average
                                   Shares     Price           Shares     Price                        Price
<S>                               <C>         <C>            <C>         <C>              <C>         <C>
Outstanding, beg. yr.             960,000     $0.21          670,000     $0.22            920,000     $1.27
Granted                                                      290,000     $0.19            520,000     $0.25
Exercised                       (500,000)      N/A                 0      N/A                   0      N/A
Forfeited                        (60,000)      N/A                 0      N/A           (500,000)      N/A
Expired                         (190,000)      N/A                 0      N/A           (270,000)      N/A
                                ---------      ---      ------------      ---           ---------      ---
Outstanding, end of yr.           210,000     $0.23          960,000     $0.21            670,000     $0.22
                             ===  =======     =====          =======     =====      ===   =======     =====
</TABLE>

A summary of the outstanding stock options as of March 31, 2004, follows:

                                         Weighted Average
 Range of Exercise     Amount     Remaining Contractual       Weighted Average
       Prices       Outstanding              Life                Exercise Price
    Up to $2.99       210,000            .3589 years                $0.23

There were no options issued to any Director, Officer, or employee.

d.  Stock Rights - To The President

Reference  is made  to Note 7,  Related  Party  Transactions,  of the  Company's
financial  statements which disclose the terms and conditions of the share loans
to the Company by the President and the interest  which is payable to him by the
Company's issuance of its restricted common shares.

Any share interest  payable to the President is for shares loaned to the Company
and/or for such shares loaned or pledged for collateral purposes,  or for unpaid
interest,  from time to time, all in accordance with the terms and conditions of
Director-approved,  open-ended loan agreements dated June 20, 1988,  October 14,
1988, May 17, 1989 and April 1, 1990.

e.  Share Loans - Others

A series of  borrowings  of the  Company's  common shares were made from time to
time under the provision that the owners would sell said shares as the Company's
designee,  with the proceeds  payable to the Company.  In exchange,  the Company
agreed  to pay  these  shares  loaned  within  31 days or  less by  issuing  its
restricted  common shares,  together with interest payable in restricted  common
shares payable at a negotiated rate of interest  normally payable in advance for
a period of one year.  As of March 31,  2004,  there were no shares due to other
parties for shares borrowed or for interest payment.

f.  S.E.C. Form S-8 Registration

On May 25, 2001, the Company filed its fourth Securities and Exchange Commission
Form S-8 Registration  Statement No. 333-61650 under the Securities Act of 1933,
and it registered  1,500,000 of the Company's  $0.10 par value common shares for
the  purpose of  distributing  shares  pursuant  to the plan  contained  in such
registration. All of the 1,500,000 shares were issued as of March 31, 2003.

On June 10, 2002, the Company filed its fifth Securities and Exchange Commission
Form S-8 Registration  Statement No. 333-90122 under the Securities Act of 1933,
and it registered  1,500,000 of the Company's  $0.10 par value common shares for
the  purpose of  distributing  shares  pursuant  to the plan  contained  in such
registration.  From the 1,500,000 shares registered  682,459 shares were issued,
and 817,541 shares remain to be issued as of March 31, 2004.

g.  Commerce Group Corp. Employee Benefit Account (CGCEBA)

This  account was  established  for the purpose of  compensating  the  Company's
employees for benefits such as retirement,  severance pay, and all other related
compensation that is mandatory under El Salvadoran labor regulations,  and/or as
determined  by the  Officers  of the  Corporation.  The  Directors  provide  the
Officers of the Company  with the  authority  to issue its common  shares to the
CGCEBA  on an as needed  basis.  Under  this  plan,  payment  can be made to any
employee of the Company or the Company's subsidiaries.  The CGCEBA has sold some
of the shares  issued to this account from time to time to meet its  obligations
to its El Salvadoran employees.  As of April 1, 2003, 321,000 shares remained in
the account.  An additional  350,000  shares were issued and 286,000 shares were
sold, leaving a balance of 385,000 shares as of March 31, 2004.

(11)  Litigation

There is no known pending litigation.

(12)  Certain Concentrations and Concentrations of Credit Risk

The  Company is subject to  concentrations  of credit  risk in  connection  with
maintaining its cash primarily in two financial  institutions for the amounts in
excess of levels.  One is insured by the Federal Deposit Insurance  Corporation.
The other is an El Salvadoran banking  institution which the Company uses to pay
its El  Salvadoran  expenses and  obligations.  The Company  considers  the U.S.
institution to be financially  strong and does not consider the underlying  risk
at this time  with its El  Salvadoran  bank to be  significant.  To date,  these
concentrations of credit risk have not had a significant effect on the Company's
financial position or results of operations.

The  Company,  when it  produced  gold and  silver,  sold  its  gold and  silver
production  predominantly  to one customer.  Given the nature of the commodities
being  sold,  and because  many other  potential  purchasers  of gold and silver
exist, it is not believed that the loss of such customer would adversely  affect
the Company.

The  Company  is not  subject  to credit  risk in  connection  with any  hedging
activities  as it has not  hedged  any of its gold  production.  If the  Company
changes  its  policies,  then  it  will  only  use  highly-rated  credit  worthy
counterparties, therefore it should not anticipate non-performance.

(13) Commitments and Contingencies

Environmental Compliance

Based upon current knowledge, the Company believes that it is in compliance with
the U.S.  and El  Salvadoran  environmental  laws and  regulations  as currently
promulgated.  However,  the exact nature of environmental  control problems,  if
any,  which the  Company  may  encounter  in the  future  cannot  be  predicted,
primarily because of the increasing number, complexity and changing character of
environmental  requirements  that  may  be  enacted  or of the  standards  being
promulgated by governmental authorities.

Guarantees

The Company has provided the  Government of El Salvador with the following
 guarantees on September 27, 2002:  three-year  guarantees  were issued by the
 Banco
Agricola,  S.C. on behalf of the Company to the Ministry of Environment and
Natural  Resources;  Guarantee No.  1901-0000059-8 was issued for the San
 Cristobal
Mill and Plant in the sum of $771.49; and Guarantee no. 1901-0000058-7 was
 issued for the Renewed SSGM in the sum of $14,428.68.

On July 10, 2003 a third party liability  guarantee in the sum of $42,857.14 was
issued by Compania Anglo  Salvadorena de Seguros,  S.A. on behalf of the Company
to the Ministry of Economy's Office of the Department of Hydrocarbons and Mines.

Lease Commitments

The  month-to-month  lease of its offices is described in note (7) Related Party
Transactions of the Notes to the Consolidated Financial Statements. The lease of
the SCMP and other mining leases are described in note (4) Commerce/Sanseb Joint
Venture ("Joint  Venture") and in note (5) Synopsis of Real Estate Ownership and
Leases of the Notes to the Consolidated Financial Statements.

(14) Business Segments

The Statement of Financial Accounting Standards No. 131 (SFAS 131),  Disclosures
about Segments of an Enterprise  and Related  Information  became  effective for
fiscal years beginning  after December 15, 1997. SFAS 131 establishes  standards
for the way that public business  enterprises  determine  operating segments and
report information about those segments in annual financial statements. SFAS 131
also requires those  enterprises to report selected  information about operating
segments in interim financial  reports issued to shareholders.  SFAS 131 further
establishes  standards  for related  disclosure  about  products  and  services,
geographic areas, and major customers.

The  Company  presently  has  three  reportable  segments:   mining,  campground
operation,  and other. The mining segment was engaged in the processing of gold.
The mining operations are temporarily suspended.  The campground operation is to
lease space on an annual, monthly, or daily basis. The campground has been sold.
The  other  segments  are  those  activities  that are  combined  for  reporting
purposes.  There were no  reportable  activities  in the Internet  business;  no
income and no expenses were recorded.












<TABLE>
<CAPTION>

                                       Mining *1 El Salvador,
                                           Central America          Corporate Headquarters
Year ended March 31, 2004
<S>                                              <C>                          <C>
  Sales and revenues                             $ 0                          $ 0
  Depreciation & amortization                              0                         0
  Operating income (loss)                                  0                 (14,381)
  Total assets                                35,369,314                     244,946
  Capital expenditures                         2,084,762                             0

Year ended March 31, 2003
  Sales and revenues                             $ 0                          $           0
  Depreciation & amortization                              0                         0
  Operating income (loss)                                  0                 (35,886)
  Total assets                                33,029,998                     221,676
  Capital expenditures                          1,003,526                            0

Year ended March 31, 2002
  Sales and revenues                             $ 0                          $         38
  Depreciation & amortization                              0                         0
  Operating income (loss)                                  0                 (43,171)
  Total assets                                31,676,285                     269,149
  Capital expenditures                          1,638,682                            0

</TABLE>

*1   Its major  customer  for the  refining  and  purchase of gold is a refinery
     located in the United  States.  The price of gold is dependent on the world
     market  price over which the  Company,  the  refinery  or any other  single
     competitor do not have control.


<PAGE>





Item 9.  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

There has been no change in the Company's  certified public  accountants  during
the past two  years.  There  has been no  report  on Form 8-K of a  disagreement
between the Company and its  accountants on any matter of accounting  principles
or practices or financial statement disclosure.

Item 9(a).  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains a system of disclosure  controls and procedures.  The term
"disclosure   controls  and  procedures,"  as  defined  by  regulations  of  the
Securities and Exchange Commission ("SEC"),  means controls and other procedures
that are  designed to ensure that  information  required to be  disclosed in the
reports  that the  Company  files or  submits  to the SEC under  the  Securities
Exchange Act of 1934, as amended (the "Act"), is recorded, processed, summarized
and  reported,  within the time periods  specified in the SEC's rules and forms.
Disclosure  controls and procedures include,  without  limitation,  controls and
procedures  designed to ensure that information  required to be disclosed by the
Company  in the  reports  that it files or  submits  to the SEC under the Act is
accumulated  and  communicated  to  the  Company's  management,   including  its
principal  executive officer and its principal financial officer, as appropriate
to  allow  timely  decisions  to be  made  regarding  required  disclosure.  The
Company's Chief Executive Officer and Chief Financial Officer have evaluated the
Company's disclosure controls and procedures as of the end of the period covered
by this  Annual  Report  on Form  10-K and  have  concluded  that the  Company's
disclosure  controls  and  procedures  are  effective  as of the  date  of  such
evaluation.

Changes in Internal Control Over Financial Reporting

The Company also  maintains a system of internal  controls.  The term  "internal
controls," as defined by the American Institute of Certified Public Accountants'
Codification of Statement on Auditing Standards,  AU Section 319, means controls
and other  procedures  designed to provide  reasonable  assurance  regarding the
achievement  of  objectives  in  the  reliability  of  the  Company's  financial
reporting,  the effectiveness and efficiency of the Company's operations and the
Company's  compliance with applicable laws and  regulations.  There have been no
changes in the Company's internal controls or in other factors during the fourth
fiscal quarter that could  significantly  affect the Company's  internal control
over financial reporting.

                                    PART III

Item 10.  Directors and Executive Officers of the Registrant

The information  required by this item appears under the captions  "Officers and
Directors," "Section 16(a) Beneficial Ownership Reporting  Compliance" and "Code
of Ethics"  included in the Company's  definitive  proxy  statement for the 2004
Annual  Meeting to be filed pursuant to Regulation 14A within 120 days after the
end of the fiscal year and is incorporated by reference in this Annual Report on
Form 10-K. Information regarding executive officers and managers is contained in
Part I of this report under "Item 4(a).  Executive  Officers and Managers of the
Company."





Item 11.  Executive Compensation

The  information  called  for by  Item  11 is  incorporated  by  reference  from
information  under  the  caption  "Executive   Compensation"  in  the  Company's
definitive  proxy statement to be filed pursuant to Regulation 14A no later than
120 days after the close of its fiscal year.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

The  information  called  for by  Item  12 is  incorporated  by  reference  from
information under the captions "Security  Ownership of Directors and Management"
and "Principal  Shareholders" in the Company's  definitive proxy statement to be
filed  pursuant to Regulation  14A no later than 120 days after the close of its
fiscal year.

Item 13.  Certain Relationships and Related Transactions

The  information  called  for by  Item  13 is  incorporated  by  reference  from
information under the caption "Certain  Relationships and Related  Transactions"
in the Company's  definitive  proxy statement to be filed pursuant to Regulation
14A no later than 120 days after the close of its fiscal year.

Item 14.  Principal Accounting Fees and Services

The  information  called for by Item 14 is  incorporated  by reference  from the
information  under the caption "Fees to Independent  Accountants" to be included
in the Company's  definitive  proxy statement to be filed pursuant to Regulation
14A no later than 120 days after the close of its fiscal year.



<PAGE>


                                     PART IV

Item 15.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)  Financial Statements and Schedules

See Index to Consolidated Financial Statements and Supplementary  Financial Data
in Item 8 of this report.

Report of Independent Accountant on the Financial Statement Schedules.........68

Schedule IV (1) Indebtedness of Related Parties...............................69

Schedule IV (2) Indebtedness to Related Parties...............................71

(b)  Reports on Form 8-K

There were no Form 8-K reports  filed  during the three  months  ended March 31,
2004.

(c)  Exhibits

The exhibit  numbers noted by an asterisk (*) indicate  exhibits  actually filed
with this Annual Report on Form 10-K.  All other  exhibits are  incorporated  by
reference into this Annual Report on Form 10-K.

Exhibit No.                                     Description of Exhibit

3.1  Articles  of  Incorporation  of the  Company. (Incorporated  by  reference
  to Exhibit
               3.(i) of the Company's S.E.C. Form 8-K filed on April 13, 1999.)

3.2    By-laws  of  the  Company. (Incorporated by reference to Exhibit 3.(ii)
 of the
                   Company's S.E.C. Form 8-K filed on April 13, 1999.)

       3.3         The  Articles  of  Amendment  of  the  Wisconsin  corporation
                   increasing the authorized shares to 50,000,000 common shares.
                   (Incorporated   by  reference  to  Exhibit   3.(iii)  of  the
                   Company's S.E.C. Form 8-K filed on April 13, 1999.)

       3.4         The  Articles  of  Merger  from  a  Delaware  corporation
 to a  Wisconsin  corporation
                   effective  April 1, 1999 at 12:01 a.m.  (Central Time).
  (Incorporated  by reference to
                   Exhibit 2.(i) of the Company's S.E.C. Form 8-K filed on
April 13, 1999.)

       3.5         A  Certificate  of  Merger  filed  with  the  Office  of  the
                   Secretary  of  State of  Delaware  merging  into a  Wisconsin
                   corporation.  (Incorporated by reference to Exhibit 2.(ii) of
                   the Company's S.E.C. Form 8-K filed on April 13, 1999.)





   Exhibit No.                                     Description of Exhibit

        4          Instruments defining the rights of security holders,
including indentures.

       4.1         Two-Year  Stock Option  Agreement  dated April 30, 2002,  and
                   expiring on April 30, 2004, to purchase  40,000 common shares
                   at $.25 per share.  (Incorporated by reference to Exhibit 4.9
                   of the  Company's  Form  10-K for the year  ended  March  31,
                   2002.)

       4.2         Two-Year  Stock Option  Agreement  dated August 21, 2002, and
                   expiring on August 21, 2004, to purchase 40,000 common shares
                   at $.22 per share. (Incorporated by reference to Exhibit 4.10
                   of the  Company's  Form  10-K for the year  ended  March  31,
                   2003.)

       4.3         Two-Year Stock Option Agreement dated September 20, 2002, and
                   expiring on September  20, 2004,  to purchase  65,000  common
                   shares  at $.22 per  share.  (Incorporated  by  reference  to
                   Exhibit  4.11 of the  Company's  Form 10-K for the year ended
                   March 31, 2003.)

       4.4         Two-Year Stock Option Agreement dated September 25, 2002, and
                   expiring on September  25, 2004,  to purchase  65,000  common
                   shares  at $.22 per  share.  (Incorporated  by  reference  to
                   Exhibit  4.12 of the  Company's  Form 10-K for the year ended
                   March 31, 2003.)

        9          Voting Trust Agreement--not applicable.

       10          Material contracts regarding sale of assets and deferred
 compensation.

      10.1         Bonus  compensation,  Edward L. Machulak,  February 16, 1987.
                   (Incorporated by reference to Exhibit 7 of the Company's Form
                   10-K for the year ended March 31, 1987.)

      10.2         Loan Agreement and Promissory Note,  Edward L. Machulak,
June 20, 1988.  (Incorporated
                   by reference to Exhibit  10.2 of the  Company's  Form 10-K
for the year ended March 31,
                   1993.)

      10.3         Loan  Agreement  and   Promissory   Note,   Edward  L.
 Machulak,   October  14,  1988.
                   (Incorporated  by  reference to Exhibit  10.3 of the
 Company's  Form 10-K for the year
                   ended March 31, 1993.)

      10.4         Loan Agreement and Promissory Note, Edward L. Machulak,
May 17, 1989.  (Incorporated by
                   reference  to Exhibit  10.4 of the  Company's  Form 10-K
 for the year  ended  March 31,
                   1993.)

      10.5         Loan Agreement and Promissory Note,  Edward L. Machulak,
  April 1, 1990.  (Incorporated
                   by reference to Exhibit  10.5 of the  Company's  Form 10-K
for the year ended March 31,
                   1993.)



   Exhibit No.                                     Description of Exhibit

      10.6         Letter  Agreement,  Edward L. Machulak,  October 10, 1989.
(Incorporated  by reference
                   to Exhibit 10.6 of the Company's Form 10-K for the year
ended March 31, 1993.)

      10.7         Loan  Agreement and  Promissory  Note dated January 19, 1994.
                   (Incorporated  by reference to Exhibit 10.10 of the Company's
                   Form 10-K for the year ended March 31, 1995.)

      10.8         John E. Machulak and Susan R. Robertson,  Loan Agreement
and Promissory Note dated June
                   3, 1994.  (Incorporated  by reference to Exhibit 10.14 of
 the  Company's  Form 10-K for
                   the year ended March 31, 1995.)

      10.9         Lillian M.  Skeen,  Loan  Agreement  and Open Ended On Demand
                   Promissory  Note  dated  June  26,  1997.   (Incorporated  by
                   reference to Exhibit 10.9 of the Company's  Form 10-K for the
                   year ended March 31, 1998.)

      10.10        Robert C.  Skeen,  Loan  Agreement  and Open  Ended On Demand
                   Promissory  Note  dated  June  26,  1997.   (Incorporated  by
                   reference to Exhibit 10.10 of the Company's Form 10-K for the
                   year ended March 31, 1998.)

      10.11        Robert C.  Skeen,  Loan  Agreement  and Open  Ended On Demand
                   Promissory  Note dated  January 20,  1998.  (Incorporated  by
                   reference to Exhibit 10.11 of the Company's Form 10-K for the
                   year ended March 31, 1998.)

      10.12        John E.  Machulak  and Susan R.  Robertson,  Loan  Agreement
  and Open  Ended On Demand
                   Promissory  Note dated March 6, 1998.  (Incorporated  by
reference to Exhibit  10.12 of
                   the Company's Form 10-K for the year ended March 31, 1998.)

      10.13        Lillian M.  Skeen,  Loan  Agreement  and Open Ended On Demand
                   Promissory  Note  dated  May  21,  1998.   (Incorporated   by
                   reference to Exhibit 10.13 of the Company's Form 10-K for the
                   year ended March 31, 1998.)

      10.14        Edward A.  Machulak,  Loan Agreement and Open Ended On Demand
                   Promissory  Note  dated  March  6,  1998.   (Incorporated  by
                   reference to Exhibit 10.14 of the Company's Form 10-K for the
                   year ended March 31, 1999.)

     10.15*        Three-year  lease  agreement  by and  between the Company and
                   Corporacion  Salvadorena  de Inversiones  ("Corsain"),  an El
                   Salvadoran  governmental  agency,  covering  the real  estate
                   known as the San Cristobal Mill and Plant (SCMP)  executed on
                   April 26, 2004, retroactive to November 13, 2003.

       11*         Schedule of Computation of Net Income Per Share

       21*         Subsidiaries and Joint Venture of the Company


   Exhibit No.                                     Description of Exhibit

      23.1*        Consent of Independent Certified Public Accountant

      31.1*        Certification of Chief Executive  Officer and Chief Financial
                   Officer  pursuant to Rule  13(a)-14(a)/15d-14(a),  as adopted
                   pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

      31.2*        Certification  of  Executive  Vice  President  and  Secretary
                   pursuant to Rule  13(a)-14(a)/15d-14(a),  as adopted pursuant
                   to Section 302 of the Sarbanes-Oxley Act of 2002.

      32.1*        Certification  of Chief  Executive  Officer  and Chief
Financial  Officer  pursuant to
                   U.S.C.  Section 1350, as adopted pursuant to Section 906 of
 the  Sarbanes-Oxley  Act of
                   2002.

      32.2*        Certification  of  Executive  Vice  President  and  Secretary
                   pursuant  to U.S.C.  Section  1350,  as adopted  pursuant  to
                   Section 906 of the Sarbanes-Oxley Act of 2002.

      99.0         Additional Exhibits

      99.1*        Confirmation agreement, General Lumber & Supply Co., Inc.,
May 10, 2004.

      99.2*        Confirmation Agreement, Edward L. Machulak, May 10, 2004.

      99.3*        Confirmation Agreement,  Edward L. Machulak Rollover
Individual Retirement Account, May
                   10, 2004.

      99.4*        Confirmation Agreement,  Sylvia Machulak as an individual and
                   for her Rollover Individual Retirement Account, May 10, 2004.

      99.5         Concession  Agreement  Assignment  to the  Company by Misanse
                   (Incorporated by reference to Exhibit 1 of the Company's Form
                   10-K for the year ended March 31, 1988.)

      99.6         S.E.C. Form S-8 Registration  Statement No. 333-90122 filed
 under the Securities Act of
                   1933, as amended and declared  effective  June 10, 2002,
registering  one and one-half
                   million of its common shares,  ten cents par value.
(Incorporated by reference as this
                   S.E.C.  Form S-8  Registration  Statement  had been
filed on June 10,  2002.)  817,541
                   shares remain to be issued as of March 31, 2004.

    99.6(a)*       Consent  of  Independent   Certified  Public   Accountant  to
                   incorporate by reference in the S.E.C.  Form S-8 Registration
                   Statement No.  333-90122  filed under the  Securities  Act of
                   1933 as amended  and  declared  effective  June 10,  2002 the
                   Certified  Public  Accountant's  report  dated  May 10,  2004
                   relating to the  financial  statements of the Company for the
                   years ended March 31, 2004 and 2003.


   Exhibit No.                                     Description of Exhibit

      99.7         Individual financial  statements of majority-owned  companies
                   have been omitted because these companies do not constitute a
                   significant or material contribution to the Company.




<PAGE>


                              COMMERCE GROUP CORP.
                           FORM 10-K - MARCH 31, 2004

                                     PART IV

                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the Company has duly caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized on May 10, 2004.

                                                          COMMERCE GROUP CORP.
                                                          (Company)



                                                 By: /s/ Edward L. Machulak
                                                              Edward L. Machulak
                                             Chairman of the Board of Directors,
                                                  Member of Executive Committee,
                                                      Member of Audit Committee
                                        Director-Emeritus, President, Treasurer,
                                Chief Executive, Operating and Financial Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons,  on behalf of the Company and in
the capacities and on the dates indicated:
<TABLE>
<CAPTION>

              Name                                        Office                                    Date

<S>                                                                                                 <C> <C>
/s/ Edward L. Machulak            Chairman  of  the  Board  of   Directors,   Member  of        May 10, 2004
----------------------                                                                          ------------
Edward L. Machulak                Executive   Committee,   Member  of  Audit  Committee,
                                  Director-Emeritus,    President,    Treasurer,   Chief
                                  Executive, Operating and Financial Officer

/s/ Edward A. Machulak            Director,     Member    of    Executive     Committee,        May 10, 2004
----------------------                                                                          ------------
Edward A. Machulak                Director-Emeritus,   Executive   Vice   President  and
                                  Secretary

/s/ Sidney Sodos                  Director                                                      May 10, 2004
Sidney Sodos

/s/ John H. Curry                 Director and Member of Audit Committee                        May 10, 2004
-----------------                                                                               ------------
John H. Curry
</TABLE>



<PAGE>





      REPORT OF INDEPENDENT ACCOUNTANT ON THE FINANCIAL STATEMENT SCHEDULES


My report on the consolidated  financial  statements of Commerce Group Corp. for
its fiscal years ended March 31, 2004, 2003, 2002, 2001 and 2000, is included in
this Form 10-K. In connection  with my audits of such  financial  statements,  I
have also audited the following:  supplementary  income  statement  information,
selected  financial data report, and the related financial  statement  schedules
listed in Item 15(a) of this Form 10-K.

In my opinion,  the consolidated  financial statement  information and schedules
referred to above, when considered in relation to the basic financial statements
taken as a whole,  present  fairly,  in all material  respects,  the information
required to be included  therein,  all in accordance with accounting  principles
generally accepted in the United States of America.

Bruce Michael Redlin, CPA, LLC
Certified Public Accountant



West Allis, Wisconsin
May 10, 2004


<PAGE>


               COMMERCE GROUP CORP. AND CONSOLIDATED SUBSIDIARIES

                                 SCHEDULE IV (1)
                  INDEBTEDNESS OF RELATED PARTIES - NON CURRENT
                   YEARS ENDED MARCH 31, 2004, 2003, AND 2002

Commerce/Sanseb Joint Venture (Joint Venture)
<TABLE>
<CAPTION>

                                          Balance at
                                         Beginning of        Additions to         Deletions to       Balance at End
Name of Person (1)                        Period (3)       Indebtedness (2)       Indebtedness        of Period (3)
------------------                        ----------       ----------------       ------------        -------------

Year ended March 31, 2004
<S>                                     <C>               <C>                          <C>          <C>
Joint Venture                           $40,771,280       $4,114,110                   $0           $44,885,390

Year ended March 31, 2003
Joint Venture                           $37,320,188       $3,451,092                   $0           $40,771,280

Year ended March 31, 2002
Joint Venture                           $33,109,401       $4,210,787                   $0           $37,320,188
</TABLE>

(1)     Commerce Group Corp. (90% ownership) and San Sebastian Gold Mines, Inc.
 (10% ownership),  Joint Venture ("Joint  Venture");  includes the advances from
        three of the Company's subsidiaries.

(2)     The purpose of the advances is to continue the exploration, exploitation
        and  development  of  the  SSGM  and  the  other  mining  prospects  and
        activities  managed  by the  Joint  Venture  which  are  located  in the
        Republic  of El  Salvador,  Central  America.  Also,  funds were used to
        retrofit,  rehabilitate,  repair and to renovate the San Cristobal  Mill
        and Plant  acquired by the Joint  Venture  for the purpose of  producing
        gold. The standby  maintenance and holding costs are also included.  The
        addition  to  indebtedness  is netted to  include  any  adjustments  for
        payments or credits.

(3)     Beginning with September 30, 1987, the total indebtedness includes the
 advances of $590,265 from three of the Company's subsidiaries.

San Sebastian Gold Mines, Inc. (SSGM)
<TABLE>
<CAPTION>

                                           Balance at
                                          Beginning of       Additions to         Deletions to         Balance at
Name of Person (1)                           Period        Indebtedness (2)       Indebtedness       End of Period
------------------                           ------        ----------------       ------------       -------------

Year ended March 31, 2004
<S>                                      <C>              <C>                          <C>          <C>
SSGM                                     $34,160,023      $2,180,883                   $0           $36,340,906

Year ended March 31, 2003
SSGM                                     $31,989,058      $2,170,965                   $0           $34,160,023

Year ended March 31, 2002
SSGM                                     $29,505,884      $2,483,174                   $0           $31,989,058
</TABLE>

(1)      San Sebastian Gold Mines, Inc. (SSGM) in which Commerce Group Corp.

owns 82 1/2% of its issued and outstanding common shares.
(2)      The advances to SSGM primarily consist of the interest due to the
Company on SSGM's outstanding indebtedness.


<PAGE>

















                       This Page Left Blank Intentionally.


<PAGE>


               COMMERCE GROUP CORP. AND CONSOLIDATED SUBSIDIARIES

                                 SCHEDULE IV(2)
                         INDEBTEDNESS TO RELATED PARTIES
               CURRENT YEARS ENDED MARCH 31, 2004, 2003, AND 2002
<TABLE>
<CAPTION>

                                              Balance at        Net Additions
                                             Beginning of       (Deletions) to        Balance at
Identity of Debtor                              Period         Indebtedness (1)     End of Period
-------------------                             ------         ----------------     -------------

Year ended March 31, 2004
<S>                                             <C>                 <C>                 <C>
President of the Company                        $5,521,516          $1,044,301(a)       $6,565,817
President's RIRA                                   824,866              90,200(b)          915,066
President's Affiliated Company                   1,120,442             141,948(c)        1,262,390
President's Wife's RIRA                            429,391              74,190(d)          503,581
President's Son/Daughter-in-Law                    131,165              22,663(d)          153,828
                                            -----  -------   ------     ------      -----  -------
 Total, notes payable                           $8,027,380         $1,373,302           $9,400,682
                                                ==========         ============         ==========

President's Accrued Salary                      $2,636,515         $   178,750(e)       $2,815,265
                                                ==========         ===========          ==========

President's Wife's Consulting Fees                    $           $     36,000(f)      $   327,600
                                                      ====        ============         ===========
                                            291,600

Legal fees (President's son is a
principal)                                     $   326,941      $           74(g)      $   327,015
                                               ===========      ==============         ===========

Year ended March 31, 2003
President of the Company                        $4,643,856         $   877,660(a)       $5,521,516
President's RIRA                                   703,647             121,219(b)          824,866
President's Affiliated Company                   1,098,193              22,249(c)        1,120,442
President's Wife's RIRA                            366,289              63,102(d)          429,391
Others                                             111,889              19,276(d)          131,165
                                            -----  -------   -------    ------      -----  -------
 Total, notes payable                           $6,923,874         $1,103,506           $8,027,380
                                                ==========         =============        ==========

President's Accrued Salary                      $2,457,765         $   178,750(e)       $2,636,515
                                                ==========         ===========          ==========

President's Wife's Consulting Fees             $   255,600         $                   $   291,600
                                               ===========         ======              ===========
                                                             36,000(f)

Legal fees (President's son is a
principal)                                     $   314,804         $    12,137(g)      $   326,941
                                               ===========         ===========         ===========

Year ended March 31, 2002
President of the Company                        $3,676,503        $    967,353(a)       $4,643,856
President's RIRA                                   599,768             103,879(b)          703,647
President's Affiliated Company                     926,205             171,988(c)        1,098,193
President's Wife's RIRA                            312,459              53,830(d)          366,289
Others                                              95,445              16,444(d)          111,889
                                            ------- ------   -------    ------      -----  -------
 Total, notes payable                           $5,610,380         $1,313,494           $6,923,874
                                                ==========         =============        ==========

President's Accrued Salary                      $2,279,015         $   178,750(e)       $2,457,765
                                                ==========   =     ===========          ==========

President's Wife's Consulting Fees             $   219,600         $                   $   255,600
                                               ===========         ======              ===========
                                                             36,000(f)

Legal fees (President's son is a
principal)                                     $   308,286         $                   $   314,804
                                               ===========         =======             ===========
                                                             6,518(g)

</TABLE>

(1)(a)(b)The net  additions to the  open-ended,  secured,  on-demand  promissory
         notes issued to the President of the Company, as an individual, and not
         as a Director or Officer of the Company, and his RIRA are from net cash
         advances and/or accrued interest.

(1)(c)   The President owns 55% of an Affiliated  Company's  common shares.  The
         additions to the open-ended,  secured, on-demand promissory note issued
         to an Affiliated  Company result from cash advances,  accrued interest,
         accrued office rent,  vehicle  rental,  computer use and other expenses
         incurred on behalf of the Company.

         The President's  Affiliated Company had been issued the following stock
options:

         The President's  Affiliated  Company has purchased the following shares
         which  payment was offset by the  reduction of the notes payable to the
         Affiliated  Company:  on  January 3,  2003,  575,000  of the  Company's
         restricted common shares, $.10 par value, were sold at a price of $.175
         per share for a total of $100,625;  and on March 26,  2003,  175,000 of
         the Company's  restricted common shares, $.10 par value, were sold at a
         price of $.27 per share, for a total of $47,250.

         During the fiscal year ended March 31, 2004, the Affiliated  Company on
         June 24, 2003,  purchased  250,000 of the Company's  restricted  common
         shares at a price of $.25 each for a total of $37,500  and on  December
         17, 2003, it purchased  463,600  restricted common shares at a price of
         $.25  each for a total of  $115,900.  The total  purchase  price of the
         shares  of  $153,400  was  paid  by  reducing  the  amount  owed to the
         Affiliated Company.

(1)(d) The  additions  resulted from accrued  interest  earned during the fiscal
year.

(1)(e)   The  President's  salary of $165,000 was accrued for the entire fiscal
 year. In addition,  the Directors,  pursuant to a resolution,  compensated  the
         President in the sum of  $13,750 for one month's vacation pay.

(1)(f)   Twelve months of consulting fees at $3,000 per month for a total of
 $36,000.

(1)(g)  The  addition  of the  amounts  due to the Law Firm  results  for  legal
services rendered.