EXHIBIT 99.1



COMMERCE GROUP CORP.

6001 NORTH 91ST ST.

MILWAUKEE, WI  53225-1795

414-462-5310 . FAX 414-462-5312

E-MAIL  info@commercegroupcorp.com

WEBSITE  www.commercegroupcorp.com





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

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

AND/OR ECOMM GROUP INC. (Ecomm)

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

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

AND/OR UNIVERSAL DEVELOPERS, INC. (UDI)

ALL LOCATED AT THE SAME ADDRESS





May 8, 2006





Mrs. Sylvia Machulak

President

General Lumber & Supply Co., Inc.

6001 North 91st Street

Milwaukee, Wisconsin  53225



Dear Mrs. Machulak:



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

Directors were informed about the annual confirmation, disclosure and

status letter that you requested from Commerce and its affiliates to

establish and confirm the amount due and the collateral pledged along

with any other Commerce obligations or agreements made to General Lumber

& Supply Co., Inc. (GLSCO and/or Lender)  as of Commerce's fiscal year

ended March 31, 2006.  Today, Commerce's Directors, by unanimous consent,

approved, ratified and confirmed the contents of this letter and

authorized me to submit its understanding of your status with Commerce,

which is as follows:



1.  Promissory Notes and Other Obligations



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

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

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

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

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

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

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

National Bank of Chicago, Chicago, Illinois.  Beginning with

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

established by the First National Bank of Chicago, Chicago,

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

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

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

this promissory note as of March 31, 2006 is $2,043,647.62.

Commerce has



<PAGE>



Mrs. Sylvia Machulak

President

General Lumber & Supply Co., Inc.

May 8, 2006

Page 2 of 13 Pages





renewed this promissory note as of March 31, 2006 and a copy is

attached (Exhibit A).  A schedule includi ng all of the

transactions pertaining to the activities relating to this note

during the fiscal year ended March 31, 2006 is also attached

(Exhibit A-1).



Commerce is no longer issuing monthly Notes for the payment of

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

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

deduct any payments or credits made by Commerce to the current

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

obligations owed to GLSCO.



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

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

confirmation letter) so that the Lender will have a current

substituted dated debt instrument.  The Directors acknowledged

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

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

of time involved and the number of transactions make it

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

each transaction.  Therefore, the Directors have unanimously

agreed to continue to embrace this resolution, which was adopted

on May 9, 2005:



WHEREAS, in the past 20 years or more the following parties:

General Lumber & Supply Co., Inc. (GLSCO); Edward L. Machulak  as

an individual and not as a Director or Officer of Commerce (ELM);

the Edward L. Machulak Rollover Individual Retirement Account

(ELM RIRA), the Sylvia Machulak Rollover Individual Retirement

Account (SM RIRA), and Sylvia Machulak, as a consultant and as an

individual (SM), hereafter collectively and individually

identified as the Lender(s), have accounted for advancing cash

funds, earning accrued interest, and for appropriate credit which

was reconciled to the open-ended, secured, on-demand notes(s);

and



WHEREAS, the Directors desire to minimize the record keeping

in these transactions without jeopardizing, diminishing,

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

changing the procedures in handling the recording of any notes(s)

issued or to be issued; and





<PAGE>



Mrs. Sylvia Machulak

President

General Lumber & Supply Co., Inc.

May 8, 2006

Page 3 of 13 Pages







WHEREAS, in order to provide an easier accounting facility

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

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

incorporate said renewed note(s) with the annual confirmation

agreement(s); and



WHEREAS, prior to the change to issue substituted renewed

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

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

were recognized by separate accounting records; therefore, be it



RESOLVED, That the Directors authorize and empower the

Officers to substitute and issue renewed consolidated

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

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

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

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

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

Individual Retirement Account (ELM RIRA), the Sylvia

Machulak Rollover Individual Retirement Account (SM RIRA),

and Sylvia Machulak, as a consultant and as an individual

(SM), hereafter collectively and individually identified as

the Lender(s); and



BE IT FURTHER RESOLVED, That the Officers of the

Company are authorized and empowered to assure the Lender(s)

that by substituting and consolidating the existing note(s)

and issuing the renewed note(s) on the last day of the

Company's fiscal year beginning with March 31, 2005 with the

understanding that the intention is that the Lender(s) will

not jeopardize, lose, diminish, risk, alter or change any

rights, including the pledge of collateral, that are

inherent with the initial note(s) by the issuance of annual

renewed open-ended, secured, on-demand promissory note(s);

and



BE IT FURTHER RESOLVED, That the Directors acknowledge

that the only purpose of the change and substitution to

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

reduced accounting and reducing the paperwork involved; and



BE IT FURTHER RESOVED, That the Officers are authorized

and empowered to perform any act that they deem necessary to

accommodate the purpose of issuing annual renewed note(s).



<PAGE>



Mrs. Sylvia Machulak

President

General Lumber & Supply Co., Inc.

May 8, 2006

Page 4 of 13 Pages





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

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

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

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

square feet, and the monthly rental charge was increased to

$2,789.  All other terms and conditions of the Amended October 1,

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

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

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

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

letter.)



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

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

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

are made through GLSCO because Commerce does not have the credit

availability from the various sellers of goods, merchandise, etc.

that is required by it or the Joint Venture.  The amount due from

time to time varies.  As of March 31, 2006, there is nothing due

on this open account.



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

purchase of restricted Commerce common shares based on a price

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

purchasers at an arms-length transaction.  There were no

transactions consummated during this fiscal year.



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

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

agreed that Commerce would operate the SRC until such time that

GLSCO would terminate this agreement.



<PAGE>



Mrs. Sylvia Machulak

President

General Lumber & Supply Co., Inc.

May 8, 2006

Page 5 of 13 Pages







Commerce retained the profits earned from the SRC operations and

the following describes the transactions that took place:



Revenues    Expenses    Profit

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

Fiscal year end

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

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

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

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

Interest July 1, 2001

through March 31, 2003                                11,918.31

----------

April 1, 2003 Total

Addition to GLSCO Note

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

==========



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

==========

April 1, 2004 Entry GJ4-P1;

Addition to GLSCO Note                               $20,592.55

==========



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

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

Addition to GLSCO Note                               $21,088.65

==========



March 31, 2006               $ 52,827.38  $39,217.48  $13,609.90

==========

March 31, 2006 Entry GJ3-P25;

Addition to GLSCO Note                               $13,609.90

==========



f.  On March 31, 2006, the amount due of $13,609.90 by Commerce to

GLSCO was transferred to the notes payable due to GLSCO.



2.  Collateral Pledged



The collateral specifically pledged to GLSCO or as otherwise noted is

as follows:



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

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

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

and Commerce agree that no additional shares of any kind

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

GLSCO.  Reference is made to Exhibit 3 included in the April 9,

1990 confirmation letter.



b. 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



<PAGE>



Mrs. Sylvia Machulak

President

General Lumber & Supply Co., Inc.

May 8, 2006

Page 6 of 13 Pages



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 4 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.



c. Commerce/Sanseb Joint Venture (Joint Venture)



Commerce and Sanseb agree that ELM (the other Lenders were

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

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

whatsoever in the Joint Venture which was formed on September 22,

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

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

it will include whatever assets are owned by the Joint Venture,

including, but not limited to the precious metal ore reserves.

Reference is made to Exhibit 5 included in the April 9, 1990

confirmation letter.



d. Uniform Commercial Code Filing - all other specific assets



An interest with ELM in filing financing statements under the

Uniform Commercial Code by an assignment and pledge of all

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

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

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

land contract receivables, contract rights, instruments and

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

and all documents relating to inventory, including all goods held

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

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

supplies used or consumed in the business of Commerce, the Joint

Venture, SLE, and Homespan; all office furniture, fixtures and

all other equipment; all general intangibles, all stock and

securities of any kind, and all rights, titles and interest in

the Commerce Group Corp./San Sebastian Gold Mines, Inc. Joint

Venture, and all additions and accessions to, all spare and

repair parts, special tools, equipment and replacements for all

returned or repossessed goods the sale or lease of which gave

rise to, and all proceeds and products of the foregoing.

Reference is made to the Wisconsin Department of Financial

Institutions Uniform Commercial Code filing, Exhibit 6, included

in

<PAGE>



Mrs. Sylvia Machulak

President

General Lumber & Supply Co., Inc.

May 8, 2006

Page 7 of 13 Pages



the April 9, 1990 confirmation letter, the renewed UCC-1

filing on December 23, 1996, Exhibit B, included in the April 14,

1997 confirmation letter, and the UCC-4 continuation filing on

June 27, 2001 at 8:55 a.m., Filing #02078155 (Exhibit B of the

May 13, 2002 confirmation letter).



e. Acknowledgement of previously recorded collateral provided to the

Lenders



Historical information - San Sebastian Gold Mine Concession



GLSCO, ELM, the Edward L. Machulak Rollover Individual Retirement

Account (ELM RIRA) and the Sylvia Machulak Rollover Individual

Retirement Account (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 Mineral San Sebastian, S.A. de C.V

(Misanse) on July 23, 1987, and thereafter from time to time

amended, and which Misanse then assigned to the Joint Venture on

September 22, 1987.  This collateral specifically includes, but

is not limited to, all of the San Sebastian Gold Mine (SSGM)

precious metal ore reserves.  Commerce and the Joint Venture have

the right to assign this and any subsequent concession agreement.

Reference is made to Exhibit 5 included in the April 9, 1990

confirmation letter.



The following collateral has been previously assigned to the

Lenders pursuant to resolutions adopted by the Directors:



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



Both Commerce and San Sebastian Gold Mines, Inc. have

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

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

Reference is made to Historical information - San Sebastian

Gold Mine Concession.



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

approximately 40.7694 square kilometers (10,070 acres)

Government of El Salvador Resolution No. 27.



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

which covers an area of 42 square kilometers and includes

approximately 1.2306



<PAGE>



Mrs. Sylvia Machulak

President

General Lumber & Supply Co., Inc.

May 8, 2006

Page 8 of 13 Pages



square kilometers of the Renewed SSGM.  The New SSGM is in

the jurisdiction of the City of Santa Rosa de Lima in the

Department of La Union and in the Nueva Esparta in the

Department of Morazan, Republic of El Salvador, Central

America.  On February 24, 2003, the El Salvador Department of

Hydrocarbons and Mines (DHM) issued the New SSGM for a period

of four years starting from the date following the

notification of this resolution which was received on March

3, 2003.  The New SSGM may be extended for two two-year

periods, or for a total of eight years.  Besides the San

Sebastian Gold Mine,  three other formerly operative gold and

silver mines known as the La Lola Mine, the Santa Lucia Mine,

and the Tabanco Mine are included in the New SSGM and are

being explored.  The Company has complied as required by

filing its annual activity report and it paid the annual

surface tax.  This concession had been assigned collectively

to all of the Lenders named herein on May 12, 2003 and the

assignment was included in the May 12, 2003 confirmation

agreement as Exhibit B.



(3) Lease agreement by and between Mineral San Sebastian Sociedad

Anomina de Capital Variable (Misanse) and Commerce dated

January 14, 2003



The term of this lease agreement coincides with the term of

the Renewed San Sebastian Gold Mine Exploitation Concession

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

agreement has been assigned to all of the Lenders named

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

May 12, 2003 confirmation agreement as Exhibit B.



(4) Renewed San Sebastian Gold Mine Exploitation

Concession/License (Renewed SSGM) - approximately 1.2306

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

Salvador, Central America (pledged and assigned as collateral

on May 10, 2004) Government of El Salvador Agreement No. 591.



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

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

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

and to simultaneously cancel the concession obtained on July

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

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

the DHM admitted to the receipt of the application and the

Company proceeded to file public notices as required by

Article 40 of the El Salvadoran Mining Law and its Reform

(MLIR).  On April 16, 2003, the



<PAGE>



Mrs. Sylvia Machulak

President

General Lumber & Supply Co., Inc.

May 8, 2006

Page 9 of 13 Pages



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 t ax.  On August 29,

2003 the Office of the Ministry of Economy formally presented

the Company with the 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.  On

May 20, 2004 (delivered June 4, 2004) the Government of El

Salvador, under their Agreement Number 591, extended the

exploitation concession for a period of 30 years.  A copy of

the assignment dated May 10, 2004, is attached to the May 10,

2004 confirmation letter as Exhibit B and the Renewed SSGM

agreement is attached to Exhibit B and referred to as Exhibit

1.



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

between Commerce and Corporacion Salvadorena de Inversiones

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

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

Pledged and assigned as collateral on May 10, 2004.



The renewed three-year SCMP lease for the property located

near the City of El Divisadero was finalized and executed on

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

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

10, 2004 confirmation letter as Exhibit B and the lease

agreement is attached to Exhibit B and referred to as Exhibit

2.



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

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

pledged and assigned as collateral on May 9, 2005



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

application with the DHM for the Nueva Esparta Exploration

Concession/License which consists of 45 square kilometers and

is located north and adjacent to the New SSGM.  On May 25,

2004 the Government of El Salvador, under their Resolution

No. 271, issued the Nueva Esparta Exploration

Concession/License for a period of four years starting from

the date following the notification of this resolution which

was received on June

<PAGE>



Mrs. Sylvia Machulak

President

General Lumber & Supply Co., Inc.

May 8, 2006

Page 10 of 13 Pages



4, 2004.  This concession/license may be

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

years.  This rectangular area is in the Departments of La

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

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

Included in the Nueva Esparta are eight other formerly

operated gold and silver mines known as:  the Banadero Mine,

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

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

the Or o Mine.  A copy of the assignment dated May 9, 2005

was attached to the May 9, 2005 confirmation letter as

Exhibit C and the Nueva Esparta Exploration Concession was

attached to Exhibit C and referred to as Exhibit 1.



(7) Acknowledgment of collateral provided through May 8, 2006



Commerce's Directors have on May 8, 2006 authorized and

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

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

that it has to GLSCO, ELM, the ELM RIRA, the SM RIRA and SM,

collectively and individually referred to as Lenders, as

additional collateral for all of the outstanding loans and

obligations as of March 31, 2006, including all future

advances of any kind.  Collateral that has been provided

through May 8, 2006 is:



3.   Cross Pledge Collateral Agreement



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

entitled to specific collateral that has been pledged to them by

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

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

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

first right to the proceeds from the specific collateral pledged to

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

Venture also have cross-pledged the collateral without diminishing

the rights of the specific collateral pledged to each of the

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

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

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

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

be available is for the purpose of satisfying any debts and

obligations due to each of the named parties.  The formula to be

used (after deduc ting the payments made from the specific

collateral) is to total all of the debts due to GLSCO, ELM, the ELM

RIRA, the SM RIRA and SM, and then to divide this total debt into

each individual debt to establish each individual's percentage of

the



<PAGE>



Mrs. Sylvia Machulak

President

General Lumber & Supply Co., Inc.

May 8, 2006

Page 11 of 13 Pages



outstanding debt due.  This percentage then will be multiplied by

the total of the excess collateral to determine the amount of

proceeds each party should receive from the excess collateral.  Then

the amount due to each of them would be distributed accordingly.



4.   Cancellation of Inter-Company Debts Upon Default



Since certain of the collateral specifically or collectively pledged

to GLSCO, ELM, the ELM RIRA, the SM RIRA and SM consists of the

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

interest in the ownership of the Joint Venture, Commerce agreed,

upon default of the payment of principal or interest to any of the

individual Lender(s) mentioned herein, that it will automatically

cancel any inter-company debts owed to Commerce by any of its

wholly-owned subsidiaries or affiliates or the Joint Venture at such

time as any of the stock or Joint Venture ownership is transferred

to the collateral holders as a result of default of any promissory

note.



5.   Guarantors



This agreement further confirms that Commerce and all of the

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

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

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

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

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

contained in the agreement and/or any collateral or mortgages

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

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

benefit of GLSCO, ELM, the ELM RIRA, the SM RIRA, and SM.  Reference

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

letter.



6. Re-Execution Agreement(s)



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

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

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

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

required by GLSCO.  Commerce also acknowledges that Commerce may be

liable to pay certain costs related to any of the transactions

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

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

may demand payment and Commerce does hereby agree to make such

payment forthwith.  All requests for corrections of any errors

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

seven (7)



<PAGE>



Mrs. Sylvia Machulak

President

General Lumber & Supply Co., Inc.

May 8, 2006

Page 12 of 13 Pages



days of GLSCO's written request.   The failure of Commerce to comply

with Commerce's obligation(s) hereunder shall constitute a default

and shall entitle GLSCO to the remedies available for default under

any provisions of the agreements including, but not limited to the

promissory note(s) and/or the collateral pledge agreement(s) and/or

any other Commerce obligation(s).



7.   Omissions



Commerce believes that it has included all of its obligations,

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

however, since these transactions have taken place over  a long

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

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

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

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

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

included as collateral under this confirmation agreement.



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



Very truly yours,



COMMERCE GROUP CORP.



/s/ Edward A. Machulak



Edward A. Machulak

Secretary



<PAGE>



Mrs. Sylvia Machulak

President

General Lumber & Supply Co., Inc.

May 8, 2006

Page 13 of 13 Pages



The contents of this letter are agreed by the following:



COMMERCE/SANSEB JOINT VENTURE           HOMESPAN REALTY COMPANY, INC.

as Guarantor (Joint Venture)            as Guarantor (Homespan)



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

_____________________________________   __________________________________

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





ECOMM GROUP INC.                        SAN LUIS ESTATES, INC.

as Guarantor (Ecomm)                    as Guarantor (SLE)



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

____________________________________    __________________________________

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





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

as Guarantor (Sanseb)                   as Guarantor (UDI)



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

____________________________________    __________________________________

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





Accepted by:



GENERAL LUMBER & SUPPLY CO., INC.







/s/ Sylvia Machulak

____________________________________

By:  Sylvia Machulak, President

Date:  May 8, 2006





<PAGE>



Exhibit A to Exhibit 99.1







RENEWED PROMISSORY NOTE





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

6001 North 91st Street              6001 North 91st Street.

Milwaukee, WI  53225                Milwaukee, WI  53225



Principal Amount:      $2,043,647.62

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

Date of Renewed Note:  March 31, 2006



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

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

States of America, the principal amount of Two Million Forty Three Thousand

Six Hundred Forty Seven and 62/100 Dollars  ($2,043,647.62), together with

interest, paid monthly, on the unpaid principal balance from March 31, 2006,

until paid in full.



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

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

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

otherwise agreed or required by applicable law, payments will be applied first

to any accrued unpaid interest; and then to principal.  The annual interest

rate for this Note is computed on a 365/360 basis; that is, by applying the

ratio of the annual interest rate over a year of 360 days, multiplied by the

outstanding principal balance, multiplied by the actual number of days the

principal balance is outstanding and the interest is payable monthly.

Borrower will pay Lender at Lender's address shown above or at such other

place as Lender may designate in writing.



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

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

Street Journal plus four percent, but not less than sixteen percent per annum.

Borrower understands that Lender may make loans to the Borrower based on other

rates as well. The prime rate as of this date is 7.750% per annum.  The

interest rate to be applied to the unpaid principal balance of this Note will

be at a rate of 4.000 percentage points over the prime rate, but not less than

16.000% per annum.  NOTICE:  Under no circumstances will the interest rate on

this Note be less than 16.000% per annum or more than the maximum rate allowed

by applicable law.



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

owed earlier than it is due.  Early payments will not, unless agreed to by

Lender in writing, relieve Borrower of Borrower's obligation to pay on demand,

the entire amount due.  Rather, any payment will reduce the principal balance

due.  Borrower agrees not to send Lender payments marked "paid in full,"

"without recourse," or similar language.  If Borrower sends such a payment,

Lender may accept it without losing any of Lender's rights under this Note,

and Borrower will remain obligated to pay any further amount owed to Lender.



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

Lender, at its option, may, if permitted under applicable law, increase the

variable interest rate on this Note to 6.000 percentage points over the prime

rate or over the 16.000% rate, whichever is higher.  The interest rate will

not exceed the maximum rate permitted by applicable law.



DEFAULT.  Each of the following shall constitute an event of default ("Event

of Default") under this Note:



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

under this Note.



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

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

of the related documents or to comply with or to perform any term,

obligation, covenant or condition contained in any other agreement

between Lender and Borrower.



<PAGE>



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

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

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

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

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

under this Note or any of the related documents.



False Statements.  Any warranty, representation or statement made or

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

or the related documents is false or misleading in any material respect,

either now or at the time made or furnished or becomes false or

misleading at any time thereafter.



Insolvency.  The dissolution or termination of Borrower's existence as a

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

for any part of Borrower's property, any assignment for the benefit of

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

proceeding under any bankruptcy or insolvency laws by or against

Borrower.



Creditor or Forfeiture Proceedings.  Commencement of foreclosure or

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

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

governmental agency against any collateral securing the loan.  However,

this Event of Default shall not apply if there is a good faith dispute by

Borrower as to the validity or reasonableness of the claim which is the

basis of the creditor or forfeiture proceeding and if Borrower gives

Lender written notice of the creditor or forfeiture proceeding and

deposits with Lender monies or a surety bond for the creditor or

forfeiture proceeding, in an amount determined by Lender, in its sole

discretion, as being an adequate reserve or bond for the dispute.



Events Affecting Guarantor.  Any of the preceding events occurs with

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

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

indebtedness evidenced by this Note.



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

condition, or Lender believes the prospect of payment or performance of

this Note is impaired.



Insecurity.  Lender in good faith believes itself insecure.



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

entire unpaid principal balance on this Note and all accrued unpaid interest

immediately due, and then Borrower will pay that amount.



COLLATERAL.  Borrower acknowledges this Note is secured by all security

agreements, guarantees, mortgages, and other security instruments previously

granted, contemporaneously granted, and granted in the future, and it has the

collateral and other rights all as contained in a certain confirmation

agreement dated May 10, 2004 between all parties contained therein, and as

subsequently amended and updated from time to time.



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

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

amount.  This includes, subject to any limits under applicable law, Lender's

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

lawsuit, including attorneys' fees, expenses for bankruptcy proceedings

(including efforts to modify or vacate any automatic stay or injunction), and

appeals.  If not prohibited by applicable law, Borrower also will pay any

court costs, in addition to all other sums provided by law.



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

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

accepted by Lender in the State of Wisconsin.



<PAGE>



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

contemporaneously entered into a Loan or Confirmation Agreements, it is agreed

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

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

Agreements shall include, but not be limited to, a Business Loan Agreement or

any other Loan or Confirmation Agreements.



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

and upon Borrower's successors and assigns, and shall inure to the benefit of

Lender and Lender's heirs, executors, administrators,  successors and assigns.



GENERAL PROVISIONS.  This Note benefits Lender and its successors and assigns,

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

Lender may delay or forgo enforcing any of its rights or remedies under this

Note without losing them.  Borrower and any other person or corporation who

signs, guarantees or endorses this Note, to the extent allowed by law, waive

presentment, demand for payment, and notice of dishonor.  Upon any change in

the terms of this Note, and unless otherwise expressly stated in writing, no

party who signs this Note, whether as maker, guarantor, accommodation maker or

endorser, shall be released from liability.  All such parties agree that

Lender may renew or extend (repeatedly and for any length of time) this loan

or release any party or guarantor or collateral; or impair, fail to realize

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

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

yone.  All such parties also agree that Lender may modify this loan without

the consent of or notice to anyone other than the party with whom the

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



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

THIS NOTE, INCLUDING THE INTEREST RATE PROVISIONS.  BORROWER AGREES TO THE

TERMS OF THE NOTE.



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



BORROWER:



COMMERCE GROUP CORP.





/s/ Edward L. Machulak

______________________________________________

By:  Edward L. Machulak, President





/s/ Edward A. Machulak

_____________________________________________________

By:  Edward A. Machulak, Vice President and Secretary



<PAGE>





Exhibit A-1 to Exhibit 99.1



(Schedule of all transactions pertaining to

the activities relating to Exhibit A to

Exhibit 99.1 for the fiscal year ending March 31, 2006

has been purposely omitted as it only reflects

the calculations of the principal and interest.)