EXHIBIT 99.2
                                                            COMMERCE GROUP CORP.
                                 6001                         North        91st
                                                                        Street,
                                                               Milwaukee,     WI
                                                               53225-1795
                                                               414/462-5310  Fax
                                                               414/462-5312
                                                               AND/OR
                                                               COMMERCE/SANSEB
                                                               JOINT     VENTURE
                                                               (Joint Venture)
                                  AND/OR HOMESPAN REALTY CO., INC. (Homespan)
                                               AND/OR ECOMM GROUP INC. (Ecomm)
                                          AND/OR SAN LUIS ESTATES, INC. (SLE)
                                AND/OR SAN SEBASTIAN GOLD MINES, INC. (Sanseb)
                                       AND/OR UNIVERSAL DEVELOPERS, INC. (UDI)
                                               ALL LOCATED AT THE SAME ADDRESS


May 14, 2001


Mr. Edward L. Machulak
903 West Green Tree Road
River Hills, Wisconsin  53217

Dear Mr. Machulak:

At today's Commerce Group Corp.  (Commerce)  Directors'  meeting,  the Directors
were  informed  about the  confirmation  and status  letter you  requested  from
Commerce  and its  affiliates  to  establish  and confirm the amount due and the
collateral  pledged to Edward L. Machulak  (ELM) as an  individual  and not as a
Director  or  Officer  of  Commerce  or its  subsidiaries  or as the  authorized
designee of the Joint Venture as of Commerce's fiscal year ended March 31, 2001.
Today,  Commerce's  Directors  approved,  ratified and confirmed the contents of
this letter and  authorized  me to  authenticate  and  confirm  the  outstanding
obligations due to ELM and the collateral pledged to ELM as of Commerce's fiscal
year ended March 31, 2001, which are as follows:

1.       Promissory Notes and Other Obligations

         a.        An open-ended,  secured,  on-demand promissory note (Note)
dated October 1, 1989 in which all of
                  the prior  promissory  notes were  consolidated  into this
single Note amounted to $490,217.19 as
                  of that date.  All future  advances and interest,  not paid,
  are added to this Note.  This Note,
                  together  with  cash  and  other  advances  and  interest
 as  of  March  31,  2001,  amounts  to
                  $3,676,503.17.  This  Note  bears  interest,  payable
 monthly,  at the rate of 2% over the prime
                  rate  established  from time to time by the First
 National Bank of Chicago,  Chicago,  Illinois,
                  (now Bank One),  but not less than 16% per annum
(Schedule of Principal and Interest as of March
                  31, 2001,  Exhibit A).  Commerce is no longer issuing
 monthly  promissory  notes for the payment
                  of interest,  etc., but pursuant to our  understanding,
Commerce is adding these  liabilities or
                  deducting any payments to the current open-ended outstanding
 promissory note(s).


         b.       In  addition,  Commerce  owes ELM the sum of  $2,279,015.00,
  which is due for unpaid and accrued
                  salaries for a period of twenty (20) years  beginning  on
April 1, 1981  through  March 31, 2001.
                  Commerce  further  acknowledges  that ELM's  monthly  salary
for twenty (20) years is computed as
                  follows:  eleven  years at $67,740  annually  ($745,140);
 four years and six months at  $114,750
                  annually  ($516,375);  and  four  years  and six  months
 at  $165,000  annually  ($742,500).  In
                  addition,  the Directors  adopted a resolution on October
 20, 2000 to compensate ELM for vacation
                  pay at the rate of one month for each year of service,
beginning on April 1, 1981 through  March
                  31, 2001, which amounts to twenty months of pay at
 $13,750.00 a month, for a total of $275,000.

         c.       To infuse  funds  into  Commerce,  Commerce  borrowed
ELM's  Commerce  shares and ELM sold these
                  shares as designee for  Commerce's  benefit with  Commerce
 receiving  all of the  proceeds.  For
                  these  share  loans,  Commerce  has  agreed  to pay ELM
 interest  at the rate of prime  plus 3%,
                  payable  monthly with  Commerce's  restricted  common
shares and based on the Commerce shares due
                  to ELM.  Interest is also due and payable  monthly with
Commerce's  restricted  common shares for
                  the shares  pledged by ELM as collateral to others,  all
 for the Company's  interest and benefit.
                  All share loans and  interest  are to be paid  annually
on March 31 of each year.  An  accounting
                  of the Commerce  common shares due and/or paid to ELM as
of March 31, 2001,  pursuant to a series
                  of  Director-approved,  open-ended,  on-demand loan and
promissory note agreements by and between
                  Commerce and ELM dated April 1, 1990,  May 17, 1989,
 October 14, 1988 and June 20, 1988, and for
                  certain  continuous  loans and/or pledges of ELM's  se
curities that have taken place and continue
                  to occur during the fiscal year ended March 31, 2001 is as
follows:

                    1.     Share loans
                                            110,000
                    2.     Interest shares due on shares pledged to banks for
 an open line of credit

                                                       0
                    3.     Interest shares due on shares sold for the benefit
of Commerce                        984

                                              ------  ---
                           Total Commerce common shares paid and issued as of
 March 31, 2001 to ELM

                                              110,984

                  Therefore,  there were no shares due to ELM for share loans or
                  share interest as of March 31, 2001.

         d.       Reference is made to four  Director-approved,  open-ended loan
                  agreements dated June 20, 1988, October 14, 1988, May 17, 1989
                  (Exhibits  B,  C and D of the  April  12,  1993,  confirmation
                  letter)  and  April 1,  1990  (Exhibit  2 of the April 9, 1990
                  confirmation letter).

         e.       On October 23,  1993,  in order to comply with the El Salvador
                  Government's minimum capital requirements, the shareholders of
                  Mineral San Sebastian S.A. de C.V. (Misanse) voted to increase
                  Misanse's  capitalization  from  119,500  colones  to  260,000
                  colones.  This was  accomplished  via a  shareholders'  rights
                  offering on the basis of  purchasing  one share for each share
                  owned with the rights expiring on December 10, 1993. According
                  to  Misanse's  by-laws,  the  rights  not  exercised  would be
                  offered  proportionately  to the shareholders who did exercise
                  their rights.

                  In  addition  to  the  rights   offering,   the   shareholders
                  authorized  the sale of 210  additional  common  shares to the
                  following:  ten shares to each of the four  officers/directors
                  (40  shares),  five  shares  to  each  of  the  remaining  six
                  directors  (30  shares),  three  shares  to  each  of the  ten
                  supplemental  directors  (30 shares),  (the  President and the
                  Secretary of the Company,  who are  directors of Misanse,  had
                  the  right   and  they   purchased   ten  and   three   shares
                  respectively),  and 110 shares were sold to the  Company  over
                  and above the  amount  of  shares  it was  entitled  to by the
                  rights  offering  so that it would  retain its 52%  ownership.
                  When the Company  obtained the  concession  in 1987, it agreed
                  with the El  Salvador  Minister  of  Economy's  office  not to
                  increase its 52%  ownership of Misanse.  Therefore,  after the
                  rights offering, the Company owned approximately 52%.

                  On the  closing  date of  December  10,  1993  of this  rights
                  offering,  there were 264 shares that were not  subscribed and
                  purchased.  The Company  would have been  entitled to purchase
                  137  shares  (264  x  52%).  However,  the  Company  had  been
                  prohibited to purchase  these shares as it would have exceeded
                  its 52%  ownership  of Misanse  shares.  The 137  shares  were
                  acquired by ELM with prior  approval of Commerce's  directors.
                  He  acquired  an  additional  four  shares  by  virtue  of his
                  proportionate ownership. A Misanse  Director-approved  drawing
                  was held to sell the  unsubscribed  shares.  In order to close
                  the sales,  52 shares were purchased by ELM which he agreed in
                  writing  to hold  these  shares in escrow  for a period of one
                  year for the purpose of providing  certain El Salvador Misanse
                  shareholders  time to obtain funds to purchase these shares at
                  his cost. None were purchased by the Misanse shareholders.

         During June 1995,  ELM  personally  purchased an additional 264 Misanse
         common shares from a Misanse shareholder in an arms-length transaction.
         Therefore  ELM presently  owns a total of 467 Misanse  common shares or
         approximately  17.96% of the total 2,600  Misanse  common shares issued
         and outstanding.



  2.     Collateral Pledged to ELM

         The collateral specifically pledged to ELM is as follows:

         a.       A Collateral  Pledge  Agreement dated October 14, 1981 granted
                  to  ELM  by  Commerce   pledging  the  following   collateral:
                  2,002,037  shares of Sanseb common stock,  par value $0.10 per
                  share and 1,346 shares of Mineral San Sebastian,  S.A. de C.V.
                  common  stock,  par value one hundred  colones per share.  The
                  shares pledged are as follows: the 618 shares originally owned
                  by Commerce, and the 618 shares plus 110 shares purchased from
                  the October 23, 1993  Misanse  rights  offering.  Reference is
                  made to Exhibit 4 included  in the April 9, 1990  confirmation
                  letter.

         b.       A Collateral  Pledge  Agreement  dated February 24, 1983, by
Commerce,  SLE and UDI  collectively
                  and individually, pledging the following collateral:

                  300 shares of no par value common shares of Homespan (formerly
                  known as Trade  Realty  Co.,  Inc.),  Certificate  No. 7 dated
                  January  21,  1974,  being 100% of its issued and  outstanding
                  shares.  Homespan and Commerce agree that no additional shares
                  of  Homespan   will  be  issued  as  long  as  there  are  any
                  obligations  due to ELM;  1,800  shares of no par value  (UDI)
                  capital  stock  Certificate  No. 17 dated  September 15, 1972,
                  representing  100% of the shares issued and  outstanding.  UDI
                  and Commerce  agree that no  additional  shares of UDI will be
                  issued as long as there are any outstanding obligations due to
                  ELM.  Reference  is made to Exhibit 5 included in the April 9,
                  1990 confirmation letter.

         c.       Collateral  Pledge  Agreement  dated July 13, 1983 granted to
 General  Lumber & Supply Co.,  Inc.
                  (GLSCO)  and  ELM by  Commerce,  SLE,  and  UDI,
 individually  and  collectively,  pledging  the
                  following collateral:

                  419,000 shares of fully paid and  nonassessable  shares with a
                  par value of $.05 each of the capital  stock of  International
                  Property  Exchange,  Inc.  (IPE),  formerly  known as  Capital
                  Funding & Development  Corp.,  Certificate 2885 dated June 30,
                  1983; and it was verified during  Commerce's fiscal year ended
                  March  31,  2000,  that the State of Nevada  IPE  Charter  was
                  cancelled because IPE did not comply with the Secretary of the
                  State of Nevada annual filing requirements.

                  One voting  membership  certificate of San Luis Valley
Irrigation Well Owners,  Inc.,  Membership
                  Certificate No. 871, dated November 27, 1979;

                  Certificate  No. 312,  Membership  No. 871,  consisting  of
 .001447  units of  Augmentation  Plan
                  Number One of San Luis Valley Irrigation Well Owners, Inc.
 dated February 8, 1980;

                  100 common shares of $0.10 par value,  Piccadilly (now Ecomm),
                  Certificate  No. 1, dated July 23,  1974.  Ecomm and  Commerce
                  agree  that no  additional  shares of Ecomm  will be issued as
                  long as  there  are any  outstanding  obligations  due to ELM.
                  Reference  is made to Exhibit 6 included  in the April 9, 1990
                  confirmation letter.

         d.       A Deed of Trust dated November 3, 1983 by and between
 Homespan,  as party of the first part, and
                  Ronald K.  Carpenter,  Esq.  (Trustee),  as party of the
second part,  for the benefit of ELM and
                  GLSCO,  as party of the  third  part.  The  Deed of  Trust
 is in favor of ELM and  GLSCO  and is
                  open-ended  to secure  the  promissory  note(s)  due to
 ELM and GLSCO and to  further  secure any
                  future  obligations  that Commerce or Homespan may incur
from them.  This Deed of Trust is issued
                  to Ronald K.  Carpenter,  Esq.,  Trustee  for the benefit
of ELM and GLSCO and is a first lien on
                  the 331-acre  Standing  Rock  Campground  located in
Camdenton,  Missouri.  The Deed of Trust was
                  recorded  on  November 5, 1984 in Camden  County,  Missouri
 at 1:24 p.m. in Book 122,  Page 200.
                  Reference  is made to  Exhibit 7 included  in the April 9,
1990  confirmation  letter.  On August
                  14, 2000, with the Directors' approval,  this property,
 via an agreement,  was conveyed to GLSCO
                  in  consideration  of the  cancellation  of  $1,249,050
of debt  owed  to  GLSCO  and for  other
                  consideration contained in the said agreement.

         e.       Two Deeds of Trust to a Colorado Public Trustee granted by
 SLE to ELM are described as follows:

                  A Deed of Trust dated March 20, 1984,  consisting of four lots
                  in the San Luis North Estates Subdivision, Costilla, Colorado,
                  and recorded at 9:01 a.m. on August 2, 1984, in Book 238, Page
                  600, Reception No. 157128;

                  A Deed of Trust  dated  October  4,  1982,  consisting  of six
                  parcels  of land in the San Luis  North  Estates  Subdivision,
                  Costilla,  Colorado,  and  recorded at 8:40 a.m. on October 6,
                  1982,  in Book  228,  Pages  300-301,  Reception  No.  148981.
                  Reference  is made to Exhibit 8 included  in the April 9, 1990
                  confirmation  letter.  All ten  lots  were  conveyed  with the
                  Directors' approval to the Sylvia Machulak Rollover Individual
                  Retirement   Account   (SM  RIRA)  on  October  3,  2000,   in
                  consideration  of a  partial  cancellation  of debt  due  from
                  Commerce to the SM RIRA.

         f.        GLSCO, ELM, the Edward L. Machulak  Rollover  Individual
 Retirement  Account (ELM RIRA) and the
                  SM RIRA  collectively  and  individually  identified  as the
 lender(s),  have been  assigned  on
                  October  19,  1987,  all of the  rights,  titles,  claims,
 remedies  and  interest  in the Joint
                  Venture,  and to the mine concession  granted by the
Government of El Salvador to Misanse on July
                  23, 1987,  and  thereafter  from time to time  amended,
 and which  Misanse then  assigned to the
                  Joint  Venture on  September  22,  1987.  This  collateral
 specifically  includes all of the San
                  Sebastian  Gold Mine precious  metal ore reserves.  Commerce
 and the Joint Venture have the right
                  to  assign  this  and any  subsequent  concession  agreement
 .  Reference  is made  to  Exhibit  9
                  included in the April 9, 1990  confirmation  letter.
 Effective  February 1996, the Government of
                  El Salvador  approved a revised version of the mining law.
  Therefore,  Commerce  applied for the
                  San Sebastian  Gold Mine mining  concession  applicable
 to this mining law.  This  concession is
                  subject to  compliance  requirements  which have been
presented  to the El Salvador  Director of
                  Mines and  Hydrocarbons.  Therefore,  it is clearly
understood that this concession,  and all of
                  the rights  thereunder,  in addition to the  concession
granted on July 23, 1987,  together with
                  all of the precious metal ore reserves, is pledged as
collateral to the above named parties.

         g.       An interest with GLSCO in filing  financing  statements
 under the Uniform  Commercial Code by an
                  assignment  and  pledge of all  corporate  assets,  such
as but not  limited to the  property  of
                  Commerce,  Joint Venture,  SLE, and Homespan,  wherever
 located,  now owned or hereafter acquired
                  is as follows:  all accounts,  all land contract
 receivables,  contract rights,  instruments and

                  chattel paper;  all inventory,  all jewelry and precious
stones,  and all documents  relating to
                  inventory,  including  all goods held for sale,  lease or
demonstration,  to be furnished  under
                  contracts of service,  and raw  materials,  work in process
 and  materials  and supplies  used or
                  consumed in the business of Commerce,  Commerce/Sanseb
 Joint  Venture,  SLE, and  Homespan;  all
                  office  furniture,  fixtures  and all other  equipment;
 all general  intangibles,  all stock and
                  securities  of any kind,  and all rights,  titles and
 interest in the Commerce  Group  Corp./San
                  Sebastian  Gold Mines,  Inc.  Joint  Venture,  and all
additions and accessions to, all spare and
                  repair parts,  special tools,  equipment and replacements
 for all returned or repossessed  goods
                  the sale or lease of  which  gave  rise to,  and all
 proceeds  and  products  of the  foregoing.
                  Reference is made to the Uniform  Commercial  Code filing,
 Exhibit 10,  included in the April 9,
                  1990 confirmation  letter and the renewed UCC-1 filing on
December 17, 1996,  Exhibit B, included
                  in the April 14, 1997 confirmation letter.



         h.       Commerce  and  Sanseb  agree that ELM has as  collateral,  the
                  assignment and pledge of all of their rights,  titles, claims,
                  remedies,  and interest  whatsoever in the Joint Venture which
                  was formed on  September  22,  1987.  In the event of default,
                  whatever  interest  Commerce  and  Sanseb  have  in the  Joint
                  Venture  will  be  transferred  to  ELM  and it  will  include
                  whatever assets are owned by the Joint Venture, including, but
                  not limited to the precious  metal ore reserves.  Reference is
                  made to Exhibit C included  in the April 8, 1991  confirmation
                  letter.

3.       Cross Pledge Collateral Agreement

         GLSCO,  ELM, the ELM RIRA and the SM RIRA  individually are entitled to
         specific  collateral  that has been  pledged to them by  Commerce,  its
         subsidiaries,  affiliates  and  the  Joint  Venture.  Upon  default  by
         Commerce,  or its  subsidiaries  or  affiliates  or the Joint  Venture,
         GLSCO,  ELM,  the ELM RIRA and the SM RIRA have the first  right to the
         proceeds  from  the  specific  collateral  pledged  to  each  of  them.
         Commerce, its subsidiaries, affiliates, and the Joint Venture also have
         cross-pledged  the  collateral  without  diminishing  the rights of the
         specific  collateral pledged to each of the following:  GLSCO, ELM, the
         ELM RIRA and the SM RIRA.  The  purpose  and the  intent  of the  cross
         pledge of collateral  is to assure GLSCO,  ELM, the ELM RIRA and the SM
         RIRA,  that  each of them  would  be paid in  full;  thus,  any  excess
         collateral that would be available is for the purpose of satisfying any
         debts and obligations due to each of the named parties.  The formula to
         be  used  (after   deducting   the  payments  made  from  the  specific
         collateral)  is to total all of the debts  due to GLSCO,  ELM,  the ELM
         RIRA and the SM RIRA,  and then to  divide  this  total  debt into each
         individual  debt  to  establish  each  individual's  percentage  of the
         outstanding  debt due. This  percentage  then will be multiplied by the
         total of the excess  collateral  to  determine  the amount of  proceeds
         derived from the excess  collateral  and then the amount due to each of
         them would be distributed.

4.       Bonus

         On February 16, 1987, by a Consent  Resolution of all of the Directors,
         ELM was awarded as a bonus compensation, the following: for a period of
         20 years,  commencing the first day of the month following the month in
         which  Commerce  begins to  produce  gold from its El  Salvadoran  gold
         mining operations, Commerce will pay annually to ELM, 2% of the pre-tax
         profits earned from these  operations.  Reference is made to Exhibit 11
         included in the April 9, 1990 confirmation letter.




5.       Cancellation of Inter-Company Debts Upon Default

         Since part of the  collateral  pledged to GLSCO,  ELM, the ELM RIRA and
         the SM RIRA is the  common  stock  of  Homespan,  Ecomm,  Sanseb,  SLE,
         Misanse,  UDI and the interest in the  ownership of the Joint  Venture,
         Commerce  agreed,  upon default of the payment of principal or interest
         to any of the  individual  lender(s)  mentioned  herein,  that  it will
         automatically cancel any inter-company debts owed to Commerce by any of
         its  wholly-owned  subsidiaries  or  affiliates or the Joint Venture at
         such time as any of the stock or Joint Venture ownership is transferred
         to the  collateral  holders as a result of  default  of any  promissory
         note.

6.       Guarantors

         This agreement  further confirms that Commerce and all of the following
         are  guarantors  to the loans made by ELM to Commerce:  Joint  Venture,
         Homespan,  Ecomm,  SLE,  Sanseb and UDI.  They  jointly  and  severally
         guarantee payment of the note(s) that were issued to ELM and also agree
         that these note(s) may be accelerated in accordance with the provisions
         contained in the agreement and/or any collateral or mortgages  securing
         these notes.  Also,  Commerce,  all of its  subsidiaries  and the Joint
         Venture  agree to the cross  pledge of  collateral  for the  benefit of
         GLSCO, ELM, the ELM RIRA and the SM RIRA.  Reference is made to Exhibit
         12 included in the April 9, 1990 confirmation letter.

7.        Re-Execution Agreement

         In the event ELM deems that it is  necessary  or  advisable  for him to
         have Commerce re-execute any document(s) entered into,  including,  but
         not limited to the promissory  note or collateral  agreement,  Commerce
         will re-execute such document(s)  reasonably  required by ELM. Commerce
         also  acknowledges  that  Commerce  may be liable to pay certain  costs
         related to any of the transactions entered into with ELM. If at a later
         date ELM determines  that an error has been made in the payment of such
         costs to him then he may demand  payment and Commerce does hereby agree
         to make such payment  forthwith.  All requests for  corrections  of any
         errors  and/or  payment of costs  shall be  complied  with by  Commerce
         within seven (7) days of ELM's written request. The failure of Commerce
         to comply with  Commerce's  obligation  hereunder  shall  constitute  a
         default and shall  entitle ELM to the  remedies  available  for default
         under any  provisions of the agreements  including,  but not limited to
         the promissory note and/or the collateral pledge agreement.




8.       Omissions

         Commerce  believes that it has included all of its obligations,  monies
         due and has listed all of the  collateral  due to ELM,  however,  since
         these transactions have taken place over a long period of time in which
         changes could have taken place, it is possible that  inadvertently some
         item(s),  particularly  collateral,  could have been  omitted.  If that
         should prove to be a fact, then Commerce, the Joint Venture,  Homespan,
         Ecomm,  SLE, Sanseb,  and UDI agree that those omissions of collateral,
         if any, are meant to be included as collateral  with this  confirmation
         and agreement.

9.       Real Estate Ownership Adjacent to San Sebastian Gold Mine, Inc. (SSGM)

         Commerce acknowledges that ELM personally owns the real estate adjacent
         to and  bordering  the north  boundary  line of the SSGM located in the
         Republic of El Salvador, Central America, and that Comseb is performing
         certain exploration and exploitation on this property.  These costs are
         to be payable by an offset to the  amounts  due to ELM.  (Reference  is
         made to Exhibit B, "Concesion de Exploracio El Paraiso" - plat map that
         identifies  the ELM (Macay)  "92.13  Hectareas,"  in the April 13, 1998
         confirmation letter).

If you are in agreement with the contents of this letter,  please sign below and
return one copy to Commerce.

Very truly yours,

COMMERCE GROUP CORP.


/s/  Edward A. Machulak
Edward A. Machulak
Secretary


<PAGE>



The contents of this letter are agreed by the following:

COMMERCE/SANSEB JOINT VENTURE       HOMESPAN REALTY COMPANY, INC.
as Guarantor (Joint Venture)                    as Guarantor (Homespan)

/s/  Edward L. Machulak                              /s/  Edward L. Machulak
------------------------------------        ------------------------------------
By:  Edward L. Machulak, Auth. Designee    By:  Edward L. Machulak, President


ECOMM GROUP INC.                            SAN LUIS ESTATES, INC.
as Guarantor (Ecomm)                                 as Guarantor (SLE)

/s/  Edward A. Machulak                              /s/  Edward L. Machulak
------------------------------------        ------------------------------------
By:  Edward A. Machulak, President          By:  Edward L. Machulak, President


SAN SEBASTIAN GOLD MINES, INC.              UNIVERSAL DEVELOPERS, INC.
as Guarantor (Sanseb)                                as Guarantor (UDI)

/s/  Edward L. Machulak                              /s/  Edward L. Machulak
------------------------------------        ------------------------------------
By:  Edward L. Machulak, President          By:  Edward L. Machulak, President


Accepted by:

/s/  Edward L. Machulak
------------------------------------
Edward L. Machulak,  as an Individual and not as a Director or Officer of any of
the Corporations mentioned in this letter.
Date:  May 14, 2001


<PAGE>


                                              Exhibit A to Exhibit 99.2
                     (Schedule of Principal and Interest as of March 31, 2001
                    has been purposely omitted as it only reflects
                       the calculations of the principal and interest.)