1

                                                       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, 2001

                                              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                 Boston Stock Exchange
                                       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. X

The  aggregate  market  value of the voting stock held by  nonaffiliates  of the
registrant  based on the  closing  price of the OTC BB on April  25,  2001,  was
approximately $1,524,296.

Common shares outstanding as of March 31, 2001, were 15,794,008.

DOCUMENTS INCORPORATED BY REFERENCE

Part III  incorporated  by  reference  from the  registrant's  definitive  Proxy
Statement for its 2001 Annual Meeting of Shareholders  to be filed,  pursuant to
Regulation  14A,  no later  than 120 days  after the  close of the  registrant's
fiscal year.



7

<TABLE>
<CAPTION>

                                                         2
                                               COMMERCE GROUP CORP.
                                           2001 FORM 10-K ANNUAL REPORT
                                     For the Fiscal Year Ended March 31, 2001

                                                 TABLE OF CONTENTS

                                                                        Page


                                                      PART I

Item 1.
<S>                                                                          <C>
Business...................................................................  3
Item 2.
Properties..................................................................18
Item 3.
Proceedings................................................................29
Item 4.       Submission of Matters to a Vote of Security
Holders.....................................................................30
Item 4(a).    Executive Officers and Managers of the
Company.....................................................................30

                                                      PART II

Item 5.       Market for the Company's Common Stock and Related Stockholders'
Matters.....................................................................32
Item 6.       Selected Financial
Data........................................................................33
Item 7.       Management's Discussion and Analysis of Financial Condition
              and Results of
Operations..................................................................34
Item 8.       Financial Statements and Supplementary
Data........................................................................43
Item 9.       Changes in and Disagreements on Accounting and Financial
Disclosure...................................................................67

                                                     PART III

Item 10.      Directors and Executive Officers of the
Registrant...................................................................67
Item 11.      Executive
Compensation.................................................................67
Item 12.      Security Ownership of Certain Beneficial Owners and
Management..................................................................67
Item 13.      Certain Relationships and Related
Transactions.................................................................67
 ..
                                                      PART IV

Item 14.      Exhibits, Financial Statement Schedules and Reports on Form
8-K.........................................................................68
</TABLE>

Safe Harbor Statement

This document includes certain  "forward-looking  statements" within the meaning
of Section 21E of the United States Securities Exchange Act of 1934, as amended.
All  statements,  other than  statements of historical  fact,  included  herein,
including without limitation,  statements regarding potential mineralization and
reserves, exploration results, and future plans and objectives of Commerce Group
Corp.  ("Commerce"),  are forward-looking  statements that involve various risks
and uncertainties.  There can be no assurance that such statements will prove to
be accurate,  and actual results and future events could differ  materially from
those anticipated in such statements.  Important factors that could cause actual
results to differ  materially from Commerce's  expectations  are disclosed under
various  sections of this and other  documents  filed from time to time with the
United States Securities and Exchange  Commission and the Boston Stock Exchange,
Inc.



<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 ten years in the
Republic  of El  Salvador,  Central  America.  Commerce  also is involved in the
exploration,  exploitation and development of precious metals in El Salvador. It
has been active in El  Salvador  since  1968.  Its gold ore  reserve  exceed 1.5
million  ounces.  In  conjunction  with its strategy,  Commerce is determined to
acquire a business combination to assist it in achieving its goals. It continues
to seek compatible acquisition or merger candidates in the precious metals field
and/or in the Internet business.  The Company's ambition is to make certain that
it can increase  shareholder  value by  converting  its gold ore reserves into a
profitable mode and cash flow.

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
since May 5, 1999. The Company is in the business of precious  metals mining and
is reactivating its interest in the Internet business.

Precious Metal Mining

Commerce presently is 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 owns the  concession  rights to
extract gold from the San Sebastian Gold Mine ("SSGM").

Commerce's  objective  is to enhance  the value of its shares by  profits,  cash
flow, and by increasing its gold ore reserves.  This also can be achieved by its
continuing  to be a low-cost gold  producer,  by  increasing  production  and by
expanding its gold ore reserves.

Commerce's  current  goal  is to  secure  sufficient  capital  to  increase  its
production of gold to 113,000 ounces per year and to 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  mining
equipment  which will increase the  processing of its higher grade virgin ore at
the San Cristobal Mill and Plant  ("SCMP").  The heap-leach  operation will 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 or overhauled.  Another concern this fiscal
year is the  substantial  decline  in the world  market  price of gold  after it
peaked in October 1999.  Concurrent with the decision to suspend processing gold
ore is the need to expand 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.  Currently,  and for  all  financial  statement  periods
presented  herein,  the SSGM is the only one of the Company's mining  properties
which has generated  revenues,  although there are strong initial 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

<S>                                                        <C>              <C>              <C>            <C>
1.       San Sebastian Gold Mine
         (a) Virgin ore, dump waste material and
               tailings                                    14,404,096        0.081            1,166,732
         (b) Stope fill (estimated)                         1,000,000        0.340             ________      340,000
                                                       --   ---------                                        -------
                                                           15,404,096                         1,166,732      340,000
2.       San Felipe-El Potosi Mine
         (a) Tailings                                         168,828        0.060               10,130
3.       Hormiguero Mine
         (a) Tailings                                         100,000        0.064                6,400     ________
                                                       ------ -------                     ------- -----
         Totals                                            15,672,924                         1,183,262      340,000
                                                           ==========                         =========  === =======
</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,  2001,  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 $69,631,645.

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" or "Comseb") 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.
Although Misanse owns the real estate comprising the site of the SSGM, the lease
agreement  grants  Comseb the right to all gold  produced in exchange for a five
percent  royalty  over a term of 25 years  beginning  on the  first  day gold is
produced,  which Comseb may, at its option,  extend for an  additional 25 years.
Because Commerce owns 52% of Misanse, Comseb in effect pays to its shareholders,
excluding  Commerce,  a net  royalty  amounting  to less  than two and  one-half
percent of the SSGM gold production.

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 sign agreements
on behalf of the Joint Venture.

Organizational Structure

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.

                                                                    % Ownership
Homespan Realty Co., Inc. ("Homespan")                                 100.0
Mineral San Sebastian, S.A. de C.V.  ("Misanse")                        52.0
Ecomm Group Inc. ("Ecomm")                                             100.0
San Luis Estates, Inc. ("SLE")                                         100.0
San Sebastian Gold Mines, Inc. ("Sanseb")                               82.5
Universal Developers, Inc.  ("UDI")                                    100.0
Commerce/Sanseb Joint Venture ("Joint Venture")                         90.0

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 has a mining  concession  with the
government of El Salvador and is the owner of the SSGM real estate.  Misanse has
assigned the mining  concession to Commerce  Group Corp.  and San Sebastian Gold
Mines,  Inc., the mining  operator formed on September 22, 1987, and is known as
the Commerce/Sanseb  Joint Venture (Comseb).  Comseb 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 (since  September 1993) and its extension  Capulin
(since May 1995); Modesto (from August 1993 through July 1997); Hormiguero (from
September 1993 through 1998) and Montemayor (from March 1995 through July 1997).

The  Government  of El Salvador  has issued the Modesto  and  Montemayor  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 is in the process of applying for  concessions  on the property it owns
(Modesto) and on the property that it leases  (Montemayor).  It also has a lease
agreement with the owner of the San Felipe-El Potosi Mine and an application for
the concession is pending.

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, alternations, 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
transactions  to minimize the risk of fluctuations in gold prices or currencies.
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
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 is
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 has 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 accountability to
the mine,  and its  projected  low cost of  production  may allow it to  compete
effectively and to produce  reasonable  profits.  The Company's present and past
practice has been to sell its gold and silver at the world market prices.

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 and interest rate fluctuations have not had
a material impact on the Company or its results of operations.

Seasonality

Seasonality does not have a material  impact,  but the rainy season (May through
November) can curtail production.



Environmental Matters

Since the  Government of El Salvador has  established a new Mining Law effective
February 1996, its exploration, development, and production programs are subject
to environmental  protection.  The Government of El Salvador has established its
own Department of Environment.

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 may be 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.

The Company is in the process of updating its  environmental  impact study which
is being prepared by an independent El Salvadoran consultant.

Information from U.S. Embassy in El Salvador, Country Commercial Guide 2000/2001

The following are excerpts from the "Economic and  Commercial  Section,
  Embassy of the United States of America in
El    Salvador,     Country     Commercial     Guide     2000/2001,"
 dated    June    2000     obtained    from
http://www.usinfo.org.sv/econcommguide.htm:

"Chapter I - EXECUTIVE SUMMARY

"This  Country  Commercial  Guide  (CCG)  presents  a  comprehensive  look at El
Salvador's  commercial  environment,   using  economic,   political  and  market
analysis.  The CCGs were  established by  recommendation  of the Trade Promotion
Coordinating Committee (TPCC), a multi-agency task force, to consolidate various
reporting documents prepared for the U.S. business community. Country Commercial
Guides are prepared  annually at U.S.  Embassies through the combined efforts of
several U.S. Government Agencies.

"In 1999,  El  Salvador's  economy  grew an anemic  2.6  percent,  down from 3.5
percent in 1998.  The  economic  outlook,  based on the first  semester  of 2000
performance,  suggests that the Government's growth target of 3 to 4 percent for
2000  can be  attained.  The  inflation  rate in 1999 was  -1.0  percent.  Other
positive   business  climate   features   include  a  stable  currency,   rising
international  reserves,  a low  debt  burden,  the  conclusion  of  the  tariff
reduction program,  streamlined customs procedures,  and further progress in the
Government's    program   to   privatize    basic    infrastructure    such   as
telecommunications,  energy  distribution/generation,   and  the  pension  funds
administration.  The economy should improve greatly due to the recent passage of
the U.S.  Caribbean Basin Initiative that enhances trade benefits in the textile
sector,  the recently concluded Free Trade Agreement with Mexico and an increase
in GOES  revenues  as a result of the income and VAT tax reforms  introduced  in
October 1999.
 . . .

"With continued  political  stability (there was a peaceful  transition to a new
administration  on  June  1,  1999)  and  deepening  market-oriented  structural
reforms,  El  Salvador  offers a positive  environment  for U.S.  exporters  and
investors.

"Country  Commercial  Guides are  available  on the  National  Trade Data
 Bank on CD-ROM or through  the  Internet.
Please  contact  STAT-USA at  1-800-STAT-USA  for more  information.  To
locate Country  Commercial  Guides via the
Internet,  please use the  following  World Wide Web  address:
 WWW.STAT-USA.GOV.  CCGs can also be ordered in hard
copy or on diskette from the National Technical Information Service
(NTIS) at 1-800-553-NTIS. . . .

"Chapter III - POLITICAL ENVIRONMENT

"El Salvador has an excellent relationship with the United States, solidified by
years of close cooperation during and after the civil conflict,  and U.S support
for reconstruction and reconciliation  after the 1992 Peace Accords.  Leaders of
the FMLN,  the  one-time  guerrilla  organization  which has become a  political
party, have established close relationships with the U.S. Government,  seeing it
as an honest broker during the peace process.  Most  Salvadoran  people view the
U.S.  in a  favorable  light,  augmented  by the  fact  that  over  one  million
Salvadorans  live in the U.S. and send over USD $1.4 billion in  remittances  to
family members in El Salvador every year. The political  environment is expected
to remain stable over the next ten or more years.

"In March 1999, El Salvador held its second presidential  election since the end
of the war. This election was won by the right-wing Arena party,  which has held
the Presidency for the past eleven years. The FMLN, the second largest political
party,   further  increased  its  strength  in  the  March  2000  municipal  and
legislative elections, by winning 32 seats, one more than ARENA, and most of the
largest municipal centers in the country.  A good sign of a vibrant democracy is
that  the   privatizations   of  both  the   telecommunication   and  electrical
distribution  systems have not  experienced any major delays before or after the
various elections held since 1997.

"Since  its  inception  as an  anti-Communist  nationalistic  party in the early
1980s, ARENA has moderated its policies.  During the administration of President
Alfredo Cristiani (1989-1994), the government ended a 12-year civil war, greatly
liberalized the economy and reduced  corruption.  His  successors,  ex-president
Calderon  Sol,  and  Francisco  Flores,  who took  power in June 1,  1999,  have
continued these  market-oriented  economic  policies,  and have strengthened the
rule of law.

"The FMLN has strongly supported the democratic process, and pursued a pragmatic
center left  policy.  The FMLN's  economic  policy  leaders have  described  the
party's goal as a mixed economy, with private enterprise and investment and with
government regulation to ensure that social interests are taken into account.

"The right-wing National Conciliation Party (PCN), which was the governing party
before the civil conflict,  currently comprises the third largest  parliamentary
group,  with 15 seats at the  Legislative  Assembly  won  during  the March 2000
elections.

"The centrist  Christian  Democratic  Party (PDC) has seen its support erode
 since  controlling  the Presidency and
Assembly in the mid-1980s.  There are several other small parties.  The
 Social Christian Union Party (USC) includes
elements  which left the PDC. Other small leftist  parties which were
 sympathetic to the FMLN during the conflict,
but which operated legally, coalesced to form the Democratic Convergence
 Party.  . . .

"Chapter VII - INVESTMENT CLIMATE

"Openness to Foreign Investment

"The Salvadoran Government is committed to attracting foreign investment in most
sectors. The climate for foreign investment has improved  significantly over the
last few years,  as the  Government  has enacted new laws,  or amended  directly
related investment legislation,  to facilitate and regulate direct and portfolio
investment in key sectors of the economy, as well as to encourage  investment in
state enterprises under  privatization.  Companies from many countries including
the United States, Canada, Germany, Korea, Taiwan, and Mexico and lately France,
Spain,  Venezuela and Chile have made investments  here with favorable  results.
The Central Bank and the Ministry of Economy  estimate  that foreign  investment
inflows  totaled  some $250  million in 1995,  $60  million in 1997,  over $1.03
billion in 1998 (almost 90 percent  related to the  privatization  of the energy
distribution  and  telecommunications  sectors),  and $231 million in 1999.  The
primary  legislation  governing  foreign  investment  in El Salvador is the 1999
Investment Law, the 1990 Export  Reactivation Law; and an updated Free Zones Law
from 1998. Other laws complementing the basic investment legal framework are the
Banking  Law,  Insurance  Firms Law,  the  Mining  Law,  the IPR Law,  the Stock
Exchange  Law,   special   legislation   governing  the   privatization  of  the
Telecommunications  Company,  the electricity  generation and distribution laws,
and the Pension Funds Law. The law governing seaport management is being studied
for  a  possible  revision  to  allow  private  sector   participation  in  port
management.

"*The 1999  Investment  Law is a  comprehensive,  clearer  and  modern  piece of
legislation  that  encourages  natural  and  legal  persons,  including  foreign
investors,  to freely establish  business in El Salvador,  with the exception of
two activities:  small business (less than $25,000.00 initial  investment),  and
fishing within the twelve miles of territorial  sea. The law accepts  intangible
technological  contributions  as foreign direct  investment.  Thus,  copyrights,
patents,  trade  marks and  inventions  receive  protection  under the law.  For
enhanced protection,  the law encourages,  but does not require, the investor to
register  his  investment  with the  Ministry of Economy.  The law grants  equal
treatment  to domestic  and  foreign  investors,  and it creates a new,  unified
office (the National  Investment  Office,  ONI, at the Ministry of Economy),  to
reduce and facilitate the process of registering new investments in the country.
It also set forth clear  procedures to resolve  disputes  between the government
-or  national  partners-  and  foreign  investors,   and  facilitates  residence
requirements for duly registered  foreign investors.  For investors,  registered
with the Ministry of Economy, the law provides:

"--Unrestricted  remittance of net profits for investors in any economic
 activity.  Unrestricted  reinvestment  of
profits.

"-- Unrestricted remittance of funds obtained from the liquidation of a business
in proportion to the foreign funds invested.

"--Unrestricted  remittance  of royalties  and fees for use of foreign  patents,
trademarks, technical assistance and other similar services.

"-- Foreign  investors may hold dollar accounts in El Salvador and may use these
accounts to obtain local financing.

"-- Although underground resources (i.e minerals) belong to the state, the state
may grant concessions for their exploitation to local and foreign investors.

"--Investment in banks and financial institutions is subject to
provisions included in the Banking Law.

"In March 2000, in accordance  with  dispositions of the new investment law, the
Goes  announced  the  formation  of a high level  committee  to promote  foreign
investment in El Salvador. The committee,  baptized as PROESA, (The Promotion of
El Salvador) is chaired by Vice-President  Quintanilla,  and is comprised by the
Ministers  of Economy,  and Foreign  Relations,  and  prominent  private  sector
representatives.  The committee will work closely with the recently  established
National  Investment  Office  (ONI).  Currently,   PROESA  is  carrying  out  an
international campaign to attract investors. . . .

"Under the Export  Reactivation  Law of 1990,  firms not located in free zones
 and exporting  less than one hundred
percent of their  production  may apply for tax  rebates of six percent of the
 FOB value of these  exports.  A 1997
amendment to this law exempts this rebate from income tax. . . .

"It  is  not  necessary  to  have  a  local  partner  in  El  Salvador.  Some
 maquila  operations  are  completely
foreign-owned.  Three multinational oil companies operate in El Salvador,  and
two of these companies share a small
refinery. . . .

"*In January 1996, the GOES enacted a modern Mining Law, in  substitution of the
previous  law  dating  from 1922.  Under this law,  two  foreign  companies,  --
American and Canadian -- have  received  concessions  to exploit gold and silver
mines in El Salvador.

"*Since  1993 El  Salvador  has had in place a modern IPR law whose  gradual
 implementation  has become a valuable
instrument for protecting  intellectual  property of foreign investors.  Under
 this law intangible  property rights
are recognized. . . .

"Another  milestone in the  privatization  process and the opening of the
 Salvadoran  market to foreign  investment
was the approval of the Pension  Funds legal  framework in 1996.  Under the
Pension  Reform,  five private  pension
funds administrators (four of them backed with foreign capital) were
 authorized to operate in April 1998. . . .

"Conversion and Transfer Policies

"El Salvador  has a freely  convertible  currency  that since 1994 has traded at
approximately  8.75  colones per dollar.  The new  government  has  declared the
possibility  of  fixing  the rate by law.  This  currency  is  buoyed  by family
remittances of more than one billion dollars per year (USD 1.38 billion in 1999)
from  Salvadorans  who reside  outside the country.  The nation's banks and many
foreign exchange houses actively trade dollars and colones.  Foreign  businesses
freely remit profits,  repatriate  capital,  and bring in capital for additional
investments. Banks publish their exchange rates daily in local newspapers. As of
the end of May 2000, the Central Reserve Bank reported more than USD 1.9 billion
in net international reserves.

"Expropriation and Compensation

"According to El Salvador's  Constitution,  expropriation can proceed for causes
of public  need or social  interest,  and  indemnization  can take place  either
before or after the fact.

"The last case of expropriation began in 1986, when the government  nationalized
the  assets of CAESS,  one of four  recently  privatized  electric  distribution
companies.  Actually,  this was not an  expropriation  in the classic sense, but
involved  the  expiration  of a  government  concession  to build and  operate a
distribution system that would  automatically  revert to the government after 50
years of  exploitation.  The  dispute  centered  around the market  value of the
company's  stocks  at the  time of  reversion.  Six  years  later,  shareholders
received the first payment of ten million dollars. In March 1993, the government
concluded  payments  of  cash  and  bonds  and  the  case  was  settled  to  the
satisfaction of all parties.

"In 1960 the  United  States and  Salvadoran  governments  signed an  investment
guarantee treaty,  which protects U.S. investors against losses that could arise
from currency inconvertibility or expropriation.  In March 1999, the U.S. and El
Salvador  signed  a  bilateral  investment  treaty  (BIT),  pending  legislative
ratification  in both El Salvador and the U.S., that would encompass all aspects
of investment.

"Dispute Settlement

"Article 15 of the new  investment  law  establishes  the  procedures to resolve
disputes  that may arise  between  the foreign  investor  and the State or local
investor or partner.

"El  Salvador  is a  member  of  the  International  Center  for  Settlement  of
Investment  Disputes  (ICSID),  and disputes may be submitted for arbitration to
this center.  Resolving business disputes through the slow-moving domestic legal
system can be costly and  unproductive.  The  Salvadoran  courts rely on written
briefs  rather than hearings and oral  arguments.  Some  disputants  allege that
legal decisions can be bought,  and final rulings are often not enforced.  Where
possible,  arbitration  clauses,  preferably  with a  foreign  venue,  should be
included in contracts as a means to resolve business disputes. The local Chamber
of Commerce and Industry is working to establish an arbitration  dispute office,
as a service to its members.

"Political Violence

"El Salvador  continues its transition to a peacetime  society after 12 years of
civil conflict.  There have been few confirmed acts of political  violence since
the  elections in mid-1994.  Although  general  crime levels are high and are of
concern  to the  business  community,  there  has not  been  political  violence
specifically aimed at foreign investors, their businesses or their property.

"Performance Requirements

"El Salvador's investment  legislation does not require investors to export
 specific amounts,  transfer technology,
incorporate set levels of local content, or fulfill other
performance criteria. . . .

"Bilateral Investment Treaties

"The United States and El Salvador signed an investment guarantee treaty in 1960
designed  to  protect  U.S.   investors   against   expropriation   or  currency
inconvertibility.  The  United  States  and El  Salvador  also have a  framework
agreement  for  a  Trade  and  Investment  Council  (TIC).  An  all-encompassing
bilateral  investment  treaty which addresses issues such as national  treatment
for  foreign  investors,  transfers,  expropriation,  investment  disputes,  tax
policies,  was signed in March 1999, and is pending legislative  ratification in
both  countries.  The  United  States and  Salvadoran  governments  are  working
towards,  but have not yet  reached  agreement  on, a Tax  Information  Exchange
Agreement.

"El  Salvador  is a  member  of the  Central  American  Common  Market,  and has
approximately 50 commercial and technical  cooperation treaties in effect. Three
of these treaties (Mexico, Spain, and Venezuela) look to promote investment.  El
Salvador is a member of the World Trade Organization.


"OPIC

"The Overseas Private Investment  Corporation  (OPIC) has a bilateral  agreement
with El Salvador.  OPIC has approved  insurance coverage for five projects in El
Salvador,  including  the  expansion  of a  U.S.  bank  in El  Salvador,  and is
considering  several other  projects.  OPIC insures  currency  inconvertibility,
expropriation and civil strife, as well as corporate financing. El Salvador also
participates in the Multilateral Investment Guarantee Agency (MIGA).

"Labor

"El Salvador's  labor force consists of approximately  2.2 million  workers,  of
which 36 percent work in the agricultural  sector.  This is followed by services
(21 percent), commerce (18 percent), and manufacturing (16 percent). The minimum
wage in the industrial and commerce sectors is 1,260 colones or USD 144 a month.
Urban employees with minimal skills  generally earn at least twenty percent more
than the  minimum  wage.  Although  the  minimum  wage is less for  agricultural
workers, coffee plantation owners report that they pay above the minimum wage to
attract workers during the harvest.

"Official unemployment was 7.7 percent in 1999.  Underemployment is much higher,
most common  estimates  placing it at 31  percent.  However,  some  construction
contractors  cannot  find  sufficient  skilled  workers,  due to the  number  of
projects now underway in El Salvador.

"Salvadoran  labor is  perceived  as hard  working  and  trainable.  The general
educational  level is low,  which may  inhibit  the  development  of  industries
needing skilled,  educated labor. The current  administration has made education
its  first  priority.  There is a lack of  mid-level  management  talent,  which
sometimes  results in foreigners  being brought in to perform such tasks.  In an
attempt to raise the level of maquila  production,  the Salvadoran  Institute of
Professional Formation (INSAFORP) sent 119 students to India to receive 9 months
of training in computer  software  production.  These  students  have since then
graduated  and  returned  to El  Salvador  to  help in the  development  of this
industry.

"The  Constitution  of December 1983  guarantees the right of employees to
 organize into  associations  and unions.
Employers are free to hire union or non-union labor. Closed shops are illegal.

"Capital Outflow Policy

"There are no restrictions on capital  outflows for  Salvadorans,  nor are there
any  specific  incentives  to invest  capital  outside El  Salvador.  Salvadoran
investors have interests in hotels,  banks,  real estate and industry in Mexico,
Guatemala,  Honduras, Costa Rica, Panama and the U.S. Accurate statistics on the
size of these investments are not available."

Excerpts  from  a  website  about  El  Salvador,  Central  America,  located  at
http://www.dirla.com/elsalvador2.html provide the following information:

"About the size of Massachusetts, El Salvador is the smallest country in Central
America and most densely populated of the Central American countries.  Now, only
four years after a U.N.  sponsored peace treaty ended the country's  eleven year
bloody war, El Salvador is  considered  to have the most dynamic  economy in the
region.

"Thought to be the most industrialized  nation in Central America, the country's
hard working people, and improving economic indicators provide the investor with
some of the building blocks for a successful venture."

Operations, Other Than Mining

Commerce  independently and through its partially and wholly-owned  subsidiaries
conducts  other business  activities,  which at present are  substantially  less
significant  than its gold production and  exploration in El Salvador:  (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");  (3) the operation of a 331-acre campground known as Standing Rock
Campground, which is owned by Homespan and operated by the Company through March
31, 2001; and (4) advertising, and the Internet business through its subsidiary,
Ecomm Group Inc. ("Ecomm").

Land Acquisition, Development, Ownership and Real Estate Sales

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

SLE had been the developer of a large tract of land for  recreation,  retirement
and for other individual  purposes.  This land consists of  approximately  7,000
acres.  It was subdivided in the San Luis North Estates  Subdivision  located in
Costilla  County,  Colorado,  abuts  the Town of San  Luis,  Colorado,  and lies
between the San Juan and Sangre de Cristo mountain ranges in southern  Colorado.
This tract of land had been  subdivided  into 1,205 five-acre or larger parcels,
unimproved  except for gravel roads now maintained by Costilla County,  however,
drainage, survey, staking, and water rights adjudication have been completed.

As of April 1, 2000, there remained an inventory of 40 five-acre parcels of real
estate developed in the San Luis North Estates subdivision. SLE also owns twelve
improved lots located in the city of Fort Garland, Costilla County, Colorado.

On August 14, 2000, the Directors, in order to reduce corporate debt, authorized
the Officers of the Company to negotiate  the sale of its  non-income  producing
assets to the Sylvia Machulak Rollover  Retirement Account (SM RIRA) in exchange
for the  reduction of debt owed to the SM RIRA.  It was agreed to sell to the SM
RIRA, 43 parcels of land located in the San Luis North Estates Subdivision for a
sum of $64,500, and 12 lots consisting of approximately one acre located in Fort
Garland, Colorado for the sum of $6,000.  Subsequently,  the SM RIRA consummated
the purchase of all of these Costilla County, Colorado parcels of land.

The Company's  wholly-owned  subsidiary,  Homespan,  as nominee for the Company,
owned a 331-acre  campground known as Standing Rock Campground located in Camden
County,  Missouri.  This recreational resort includes approximately 3,000 lineal
feet of lake  frontage  on the  Lake of the  Ozarks,  and it has  campsites  for
recreational vehicle parking. A clubhouse and several ancillary buildings are on
the  premises.  The Company was the operator of the  campground  and was leasing
space to campers and others on a daily, weekly, or monthly basis until March 31,
2001.

On August 14, 2000, the Directors, in order to reduce corporate debt, authorized
the Officers of the Company to negotiate  the sale of its  low-income  producing
asset, the Standing Rock Campground  (SRC), to General Lumber & Supply Co., Inc.
(GLSCO) in exchange for a reduction of $1,249,050 of the debt owed to GLSCO. The
agreement  contains a condition  that if SRC were sold by GLSCO to an  unrelated
third party  during a period of one year for a sum  exceeding  GLSCO's  purchase
price,  the difference,  after taking into account all selling expenses would be
applied to reduce  the  balance of  GLSCO's  promissory  note.  In the event the
selling price to a third party would be less than GLSCO's  purchase price,  then
an addition would be made to the existing  balance of GLSCO's  promissory  note.
Also, adjustments would be made for the interest due to GLSCO during this period
of time. Reference is made to Exhibit 10.17.

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),
and about 108 miles southeast of the capital city of San Salvador,  El Salvador,
and it 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 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.

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.  Formerly,  Homespan  held the title to the real  estate  located  in
Colorado and the Standing Rock  Campground  ("SRC"),  located in the Lake of the
Ozarks. SRC was operated by the Company.  Assets of Homespan have also served as
a source of  collateral  for funds loaned to the Company and its  majority-owned
subsidiaries.

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
current strategy is to attempt to acquire or to "roll up" Internet  websites and
businesses and consolidate them into a web portal.

There can be no assurance  that Ecomm's  current  strategy  will be  successful.
Ecomm has not entered into any agreements  for the  acquisition of any websites,
web services or other technology in connection with the web portal.  There is no
assurance  that it will be able to enter into  contracts for the  acquisition of
such sites,  services and technology on terms  acceptable to Commerce and Ecomm.
The Internet business is highly speculative and competitive.

Patents and License Agreements

On July 23,  1987,  the  Government  of El  Salvador  delivered  and  granted to
Misanse, possession of a mining concession (license). On September 25, 1996, the
SSGM  concession was  reconfirmed  to comply with the 1996 El Salvadoran  Mining
Law. The Joint Venture  believes that its SSGM concession  begins on the date it
was issued--July  1987. The concession  provides 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 owned by Misanse and  encompassing
the SSGM.  Misanse assigned this concession to the Joint Venture.  (Reference is
made to "Item 2." for additional information.)

The Joint Venture has  applications  pending with the El Salvador  Department of
Energy,  Mines and  Hydrocarbons  for the exploration  rights under the February
1996 Mining Law for the San Felipe-El  Potosi Mine,  and its  extension,  the El
Capulin Mine.  Applications  for  concessions are pending for the real estate it
owns on the Modesto Mine, and the real estate it leases at the  Montemayor  Mine
and the  Hormiguero  Mine. The Company and its  subsidiaries  hold no patents or
trademarks.

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 which the Joint Venture is producing. The
gold in dore  form is  refined  and then  sold at the  world  market  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.

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.

Financial Information About Industry Segments Lines of Business

Operation

Campground:  For the years ended March 31, 2001,  2000 and 1999,  revenues  have
been  generated  from  the  campground  business.  Although  Homespan  owns  the
campground real estate, the Company was the campground  operator until March 31,
2001.  Reference is made to "Land Acquisition,  Development,  Ownership and Real
Estate Sales."

Land Sales

The  Company and its  subsidiaries  have sold their  remaining  lots in Colorado
during this fiscal year.

Mining

The Company's  primary strategy,  through its Joint Venture,  is to use its SCMP
facilities  to  process  gold ore  transported  from SSGM and other  exploration
opportunities  located in the  Republic of El  Salvador.  The Joint  Venture has
produced gold at its SCMP  operations  from March 31, 1995 through  December 31,
1999. At such time as funds are  available,  the Company  intends to process its
SSGM gold ore via an open-pit, heap-leaching system. The Joint Venture announced
the  suspension  of its SCMP  facilities  as of December 31,  1999,  in order to
overhaul, repair, retrofit and expand the SCMP.

The Company  anticipates that the capital required for the purchase of equipment
and working  capital can be  obtained  from the sale of its common or  preferred
shares,  bonds,  equity  offerings,  loans,  leases,  partial  sale of its  gold
reserves,  sale of gold,  or from a  combination  of these  and  other  creative
funding possibilities. With the substantial decline in the price of gold and low
public  market value of its common  shares,  it may be more  difficult to obtain
financing under reasonable terms and conditions.

Internet Business

As of March 31,  2001,  the  Company's  subsidiary,  Ecomm,  has not  earned any
revenue and has not  incurred  any  significant  expenses or capital  investment
other than that disclosed in this report.

Competition

The Company believes that neither it, nor any other competitor,  have a material
effect on the precious metal markets,  and that the price that the Joint Venture
will receive for its sale of gold is dependent upon world market conditions over
which neither it nor any other single  competitor have control.  The competition
is more intense in the Internet business.

Employees

As of March 31, 2001,  the Joint  Venture  employed  approximately  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  it  was  the  largest   single
non-agricultural  employer in the El Salvador  Eastern Zone.  Also,  the Company
employs  approximately  four persons (plus 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 to its employees and therefore it had 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.






















<TABLE>
<CAPTION>

                                                 Industry Segments


<S>    <C>                     <C>                                     <C>           <C>                       <C>
1.     Unaffiliated Sales                                                       Year Ended March 31,

        Industry                Location                                  2001                2000                1999
        --------                --------                                  ----                ----                ----

        Mining (*a)             El Salvador                                  $       $     413,713                   $
                                                                             0                                 785,526
        Campground              Missouri, USA                          238,520              66,902              62,176

2.     There Were No Intersegment Sales

3.     Total Revenues                                                           Year Ended March 31,

        Industry                Location                                  2001                2000                1999
        --------                --------                                  ----                ----                ----

        Mining (*b)             El Salvador                                  $       $     500,124                   $
                                                                             0                                 999,017
        Campground              Missouri, USA                          238,520              66,902              62,176
        Other                   Delaware/Wis., USA                       3,662                 134                 246
                                                              ----------------   -----------------   ------------  ---
                                Total:                           $     242,182       $     567,160         $ 1,061,439

4.     Operating Profit   (Loss)                                                Year Ended March 31,

        Industry                Location                                   2001               2000                1999
        --------                --------                                   ----               ----                ----

        Mining (*a)             El Salvador                                   $       $  (384,759)        $   (44,688)
                                                                              0
        Campground              Missouri, USA                           185,391            (8,175)             (4,267)
        Other Income            Wisconsin, USA                            3,662                  0                   0
        Corp. Hdqtrs.           Wisconsin, USA                         (59,263)            (3,298)            (41,311)
                                                              ------   --------   -------- -------   -----    --------
                                Total:                            $     129,790       $  (396,232)        $   (90,266)

5.     Identifiable Assets                                                      Year Ended March 31,

        Industry                Location                                   2001                2000               1999
        --------                --------                                   ----                ----               ----

        Mining (*a)             El Salvador                         $30,046,855         $27,831,734        $26,031,841
        Campground              Missouri, USA                                 0           1,135,500          1,135,500
        Real Estate             Colorado, USA                                 0              21,000             21,000
        Corporate Assets                                                255,830             867,967            398,460
                                                              -------   -------   -------   -------   -------  -------
                                Total:                              $30,302,685         $29,856,201        $27,586,801
</TABLE>

(*a)    The proceeds from the sale of gold and the gold inventory  received from
        the Joint Venture were used to reduce the advances due to the Company.

(*b)    Includes an added tax value  refund from the  Government  of El
 Salvador of $86,411 for 2000,  and $213,491
        for 1999.



<PAGE>



Item 2.  Properties


Mining Properties
The table below provides a summary of the most significant  mining properties in
which the Company has an interest.  More detailed information  regarding each of
these properties is provided in the text that follows:
<TABLE>
<CAPTION>

           Commerce Group Corp./San Sebastian Gold Mines, Inc. Joint Venture Properties all located in the Republic of El
 Salvador, Central America

                                      Date                       Amount of    Date Mine will be Operational
        Property        Nature of     Interest      Cost of      Funds to
       Description       Interest     was           Interest       Make
                                       Acquired                  Property
                                                                Operational
<C>  <C>    <C>        <C>              <C>      <C>            <C>          <C>
1.   San    Sebastian  Mineral           1968     5%  of   the  This     is  It  was  in   operation   on  a
     Gold        Mine  concession                 gross         dependent    curbed  production  basis until
     located  two and  consisting                 precious      on      the  December    31,    1999    when
     one-half   miles  of       100%              metal         scale    of  operations  were  suspended due
     northwest     of  ownership  of              proceeds  or  production   to  the   need   to   overhaul,
     the    city   of  the  precious              $206       a  that         repair,  restore and expand the
     Santa   Rosa  de  metals                     month         management   SCMP facilities.
     Lima   and   the  extracted                  whichever     decides  to
     Pan     American  from     this              is higher.    perform.
     Highway.          mine.                                    The  amount
                                                                of
                                                                investment
                                                                could    be
                                                                from     $5
                                                                million  to
                                                                $100
                                                                million.

2.   San    Felipe-El  Application     07/06/93   5%  of   the  Undetermined Undetermined.
     Potosi/Capulin    pending   for              gross         until     a
     Mine     located  mineral                    precious      preliminary
     near   the  city  concession                 metal         drilling
     of  Potosi,   18  for      100%              proceeds.     program  is
     miles  northwest  ownership  of                            completed;
     of the  city  of  the  precious                            estimated
     San Miguel.       metals                                   cost     of
                       extracted                                drilling
                       from     this                            is       $2
                       mine.                                    million.

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

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

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

6.   San    Cristobal  Mill      and  Equipment   Equipment     To   expand  Curbed   production   commenced
     Mill  and  Plant  Plant   owned  02/23/93    purchased     the  plant,  March 1995;  expansion  program
     located  off the  by      Joint  and         and           including    in     progress.     Operations
     Pan     American  Venture.       thereafter  extensive     a  crushing  suspended  in the last  quarter
     Highway  west of  The      real  Lease       retrofitting  system   to  of  1999  until  the   existing
     the  city  of El  estate     is   11/12/93   was      and  a  capacity  equipment    is     overhauled,
     Divisadero.       owned  by  an              continues     of      500  repaired,      restored     and
                       agency     of              to        be  tons    per  expansion     of    the    SCMP
                       the                        performed.    day;     an  facilities are completed.
                       Government                 Through       estimated
                       of         El              03/31/01,  a  sum  of  up
                       Salvador.                  total     of  to       $3
                                                  $5,822,021    million
                                                  has     been  may      be
                                                  invested  in  required,
                                                  this   plant  all
                                                  and           dependent
                                                  equipment.    whether
                                                  Depreciated   new      or
                                                  value     is  used
                                                  $3,376,422.   equipment
                                                                will     be
                                                                purchased.


</TABLE>

<PAGE>



32


                                                                          42

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 coast 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  in
1999 of the Pan American  Highway from two lanes to four lanes (from the city of
San Salvador to the Honduran  border) has been recently  completed.  The city of
Santa  Rosa de Lima  (approximately  three  miles  from the  SSGM) is one of the
largest cities in the Eastern Zone. The SSGM is  approximately 30 miles from the
city  of  San  Miguel,   which  is  El  Salvador's   second  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

Statistical production and financial data for the San Sebastian Gold Mine (SSGM)
are shown on the following table:
<TABLE>
<CAPTION>

                                 San Sebastian Gold Mine (SSGM) Operation

                                                                    03/31/01     03/31/00(3)       03/31/99
PRODUCTION
<S>                                                                        <C>        <C>            <C>
  Dry tons ore mined and processed                                         0          28,970         51,618
  Gold grade of ore (oz./ton)                                              0             .08            .08
  Strip ratio (tons waste/tons ore)                                      N/A             N/A            N/A
  Gold production (oz.)                                                    0           1,555          2,684
  Silver production (oz.)                                                  0             495            836
  Recoverable gold inventory (oz.)                                         0             100            259

FINANCIAL
  Ounces of gold sold                                                      0           1,499          2,684
  Average gold price realized                                              $  $          276              $
                                                                           0                            293
  Revenue from mine operations                                             $     $   413,713    $   785,526
                                                                           0
  Cash operating cost per ore ton mined                                    $   $       11.69  $       10.27
                                                                           0
  Cash operating  cost per ounce                                           $    $     172.67   $     197.62
                                                                           0
  Total production cost per ounce (1)                                      $    $     357.14   $     350.19
                                                                           0
  Operating earnings (loss) (2)                                            $     $ (384,759)    $  (44,688)
                                                                           0
  Capital expenditures in mining projects (2)                     $2,233,369      $2,166,900     $2,269,928
</TABLE>
<TABLE>
<CAPTION>

MINABLE RESERVES (03/31/01)
                                                                                             Contained
                                                           Tons      Average Grade         Gold Ounces(4)
<S>                                                   <C>                  <C>               <C>
Ore - virgin, dump waste and tailings                 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>

(1)      As calculated under The Gold  Institute's  Production Cost Standard,
  includes the  depreciation  expense of $320,491 or $163.35 an ounce for
         2000 and $338,797 or $126.23 an ounce for 1999.

(2)      Excludes exploration and development drilling.

(3)      Based on nine months of production.

(4)      The estimated recoverable ounces of gold by processing: SCMP, 85% to
 95%; heap leach, 65% to 70%.

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.  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 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 gold ore than can be processed at the SCMP or through
underground  operations  used by the Company and others in the past. 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.

The 960,000 tons of dump  material  present at the SSGM site has grades  ranging
from  0.082 to 0.178  ounces  of gold  per ton and it now is  combined  with the
virgin ore. 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 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  (through the Comseb 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.)

On July 28,  1975,  an amended  lease  agreement  between  Misanse as lessor and
Sanseb  as  tenant  was  executed  by the  parties  giving  the  tenant  all the
possessions  and mining  rights that pertain to the SSGM as well as other claims
that may  already  have or could be claimed in the future  within the 1,470 acre
plat of land  encompassing  the  SSGM.  The  lease was  further  amended  to run
concurrently with the concession described herein and may be extended for one or
more equal periods by the tenant as long as the tenant has paid the rent and has
complied with other  obligations  under the lease and the concession.  The lease
further  provides  that the tenant  will pay rent to equal  five  percent of the
gross gold production revenues obtained from the leased SSGM and further commits
itself to maintain production taking into consideration market,  political,  and
other conditions.  In no case will the rent be less than 1,800 colones per month
(approximately  $206 per  month at the  current  rate of  exchange).  The  lease
further  provides that, in the event the lessor wishes to sell the property,  it
must first give preference to the Company;  the lease further  provides that the
tenant must give  preference to employ its former  mining  employees and Misanse
shareholders.

The lease is freely  assignable by the Joint Venture  without notice to Misanse.
The lease may also be cancelled  by the Joint  Venture on thirty days' notice to
Misanse and thereafter all legal obligations thereunder shall cease.

Misanse Mineral Concession-Government of El Salvador

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

On  January  27,  1987,  the  Government  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.

During  February 1996, and effective 120 days  thereafter,  the Government of El
Salvador  adopted a revised Mining Law. This law grants longer  exploration  and
exploitation  terms. It also contains a provision that three percent of the gold
receipts will be paid to the  Government  of El Salvador and an  additional  one
percent is to be paid to the municipality where the mine is located.

The  concession,  or the right to mine gold, is subject to  cancellation  by the
Government of El Salvador if there is an  abandonment of the property such as if
there is no  demonstration  that the  concession  holder  intends  to carry  out
exploration, exploitation, or development of the property in good faith during a
six-month  period after the concession is granted or if the work of exploration,
exploitation  or development is suspended for six months or if the  exploration,
exploitation  or development is reduced to an extent that the effort used cannot
be regarded as being  reasonable in relation to the  importance and resources of
the mining property.

In the event of public disaster or disturbance of the public order, all mines in
the given locality shall be regarded as being in  exploration,  exploitation  or
development without the necessity of any special formality. Such event did occur
when, on November 11, 1989, the guerrillas  attempted to seize the Country of El
Salvador.  On January 16,  1992,  a peace accord and  cease-fire  agreement  was
entered into by the Government of El Salvador and its opposition. The transition
from war to peace was effected  without any serious  occurrences and final peace
was declared on December 15, 1992,  with a three-year  period to comply with the
terms of the peace pact.

The work of a concession may be suspended by permission of a competent authority
for a reasonable period not to exceed one year. An exception would be in case of
acts  of God  or  force  majeure  in  which  case  the  period  may be  extended
successively as long as such reasons exist.

A concession may be fortified for lack of security measure,  or if its condition
would endanger the lives of workers, or for failure to comply with provisions of
the  Mining  Code or other  provisions  enacted  with  respect  to any aspect of
exploitation  in the  mining  industry,  unless  corrected  within a  reasonable
period.

The Complimentary  Mining Law states that, in addition to the cases mentioned in
the El Salvador Mining Code, abandonment of the mine will be presumed if after a
significant  reduction or exhaustion of the veins,  beds, or other  formation in
exploitation, three months is allowed to pass without adequate efforts either to
exploit other  deposits  existing in the  concession or to discover new deposits
suitable for exploitation.

A concession  may be granted for an unlimited  time,  as long as the  concession
holder  complies  with  the  conditions  imposed  by law.  The  Joint  Venture's
concession is for a period of twenty-five  years,  beginning on the first day of
production, and with a right to extend it for an additional twenty-five years.

In addition,  the El Salvador  Constitution  contains certain  provisions which,
although not referring  specifically to mining,  are applicable  thereto.  As an
example, Article 138 prohibits confiscation of property.

SSGM Current Status

The Company,  through its Joint Venture is conducting the following  activities:
It is in the  exploration,  development  and  pre-production  mining stage which
consists of completing its survey,  mapping,  site preparation,  infrastructure,
construction,  planning,  and in 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 was engaged in the  exploration  and  development  of the peripheral
area (including diamond core drilling)  surrounding the main body of gold ore in
order to increase 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 $8  million  or  more  to  commence  an  open-pit,
heap-leaching  operation at the SSGM site.  An  additional $7 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 an
eight-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 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

Since the  Government of El Salvador has  established a new Mining Law effective
February 1996, its exploration, development, and production programs are subject
to  environmental  protection.  The El  Salvador  Ministry  of  Environment  has
jurisdiction over environmental control.

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.

The  Company  has  submitted  an  environmental  impact  study  prepared  by  an
independent El Salvadoran consultant to the El Salvador Minister of Environment.
It is in the process of updating its environmental impact study.

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

Potosi Location

The Joint Venture has commenced an  exploration  program on the Potosi  property
which is located approximately 18 miles northwest of the city of San Miguel, the
second 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 indicate that the potential
of developing a gold mine is above average.

Potosi Historical Information

Historical  records  evidence that exploration and production of gold took place
in 1899 and that Potosi was worked  intermittently  from 1906 through 1952.  The
main production  period in six levels was from 1938 through 1952 at a rate of 35
to 50 tons per day.  Production  data  avouch  that  30,000  ounces of gold were
produced from 1945 through 1952 after which the mine became dormant. During this
time a  curbed  underground  exploration  program  confirmed  that  the gold ore
reserves were of commercial value. The gold assays from some of the former drill
hole  samples  on the  southern  extension  of the  north-south  portion of this
property showed a grade of 0.10 to 0.35 ounces of gold per ton of ore.

Potosi Tailings' Reserve

Twenty-four  test pit hole  excavations  have been  plotted  and drilled on this
four-acre site of tailings. The depth to the bottom of the tailings' pile varied
from 7.00 to 10.2  meters (23 to 34 vertical  feet) and a total of 137.6  meters
(454  feet) of test pit hole  excavations  were  completed.  The 573 fire  assay
samples  (tailings)  indicated an average  grade of gold per ounce of 0.06.  The
remaining 168,825 tons available  multiplied by the average grade of 0.06 should
contain  10,130 ounces of gold.  The 10,130  ounces of gold  multiplied by a 70%
recovery should yield about 7,091 ounces of gold.

Potosi and El Capulin Exploration Undertakings

Since October 25, 1993, and until it suspended its program  during 1999,  Comseb
had a full-time crew, ranging from 25 to 30 employees, conducting an exploration
program consisting of surveys, channel trenching, adit openings, test pit holes,
excavation and drilling of the tailings to determine its gold content.

A total of 2,574 meters (8,494 feet) of channel  trenching was excavated  with a
grade  ranging  from 0.01 to 0.05  ounces of gold per ton. A total of 806 meters
(2,658 feet) of adits has been restored for entry into the old workings. A total
of 3,500 fire assay  samples  were  completed  with the  results  encouraging  a
drilling program.

Potosi Exploration Concession

The exploration  concession application was filed on September 6, 1993, with the
Department of Energy,  Mines and  Hydrocarbons,  a division of the El Salvador's
Minister of Economy's office, by the owners of the real estate,  the Cooperative
San Felipe-El Potosi. An application for an exploration  concession was filed on
May 8, 1997 in order to comply with the current  mining  regulations  adopted by
the  Government  of El Salvador in February  1996.  The  concession  consists of
approximately  6,100 acres.  While this  concession  application is pending,  it
precludes  others from performing  exploration on this site. Until this issue is
resolved,  Comseb's  exploration  of the El  Potosi  site has  been  temporarily
suspended.

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 and with an option to renew
the lease for an additional 25 years,  for the purpose of mining and  extracting
minerals.

Environmental Matters

Reference is made to San Sebastian Gold Mine  "Environmental  Matters." The same
information  applies except that at this time no environmental  impact study has
been conducted at San Felipe-El Potosi or the El Capulin mines.

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 the 5,000
acre site. An application  for  exploration  has been filed on September 6, 1993
with the  Department  of Energy,  Mines and  Hydrocarbons,  a division of the El
Salvador Minister of Economy's office. 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 the  question  of a  concession/license  will be
resolved.

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 El Salvador  Minister of Economy,  Department of
Energy,  Mines and  Hydrocarbons  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 El  Salvador  Director  of Energy,  Mines and
Hydrocarbons.  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.

Environmental Matters

Reference is made to San Sebastian Gold Mine  "Environmental  Matters." The same
information applies except that no environmental impact study is being conducted
at Modesto at this time.

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 Joint  Venture,  upon advice of its
legal counsel,  intends to file an application for a concession (license) on the
property it leases.

Environmental Matters

Reference is made to San Sebastian Gold Mine  "Environmental  Matters." The same
information applies except that no environmental impact study is being conducted
at Montemayor at this time.

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
second 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 Corsain to lease  approximately 166 acres of land
and the buildings  for a period of ten years.  The annual rental charge was U.S.
$11,500,  payable in advance,  and was subject to annual  increases based on the
United  States'  percentage  rate of  inflation.  The annual  rental,  including
inflation  charges,  increased to $16,331 beginning on November 1, 2000. Also as
agreed,  an $11,500 security deposit was required and this deposit is subject to
an  annual  increase  based  on  the  U.S.  inflation  rate.  The  premises  are
strategically  located to process gold ore from the other mining  prospects that
are in the exploration stage.

SCMP Mill and Plant Process Description

Instead of utilizing the existing recovery system on the site on the acquisition
date,  the Joint  Venture's  engineers  have  designed a  carbon-in-leach  (CIL)
process.

On February 23, 1993, the Company, on behalf of the Joint Venture acquired SCMP,
a precious  metals'  cyanide  leaching  mill and plant  rated with a capacity of
processing  200 tons per day  which  utilized  the  following  unit  operations:
crushing, grinding,  thickening,  agitated leaching, counter current decantation
of  leach  solution,   recovery  of  precious   metals  by  zinc   precipitation
(Merrill-Crowe),  and direct smelting of precipitates to produce precious metals
as dore and tailings' disposal.

The Company's  engineers  recommended that this processing system be retrofitted
and  converted  to process the SSGM  tailings by a  cyanidation  carbon-in-leach
(CIL) system to recover the residual cyanide soluble precious metals.  The first
pouring  of gold on a test  basis  took  place on March 31,  1995.  The SCMP was
operated on a "start-up and  build-up" to a gradual full capacity  system during
this trial and modification period.

Current Status

The start-up,  testing and  adjustment  stage of processing  the remaining  SSGM
tailings via trucking  this ore to the SCMP has  continued and the Joint Venture
is still in its preliminary  stage of producing gold. The SCMP is being 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 and  equipment  required a major
overhaul in order to place it in 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 nearly 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 continue to 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.

SCMP Personnel

The SCMP employees,  during this past year's start-up testing period  (including
its own  trained  security  personnel)  total  about 144  persons.  The SCMP was
operated 24 hours per day, seven days per week and 52 weeks per year. During the
fourth  quarter of this fiscal year,  the Joint Venture has suspended the SCMP's
operations and placed the facilities on a care and maintenance status until such
time as the Company has  sufficient  funds to overhaul  and expand this mill and
plant.

Environmental Matters

Reference is made to San Sebastian Gold Mine  "Environmental  Matters." The same
information applies.

Comseb 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 fire assays have been completed  through March 31, 2001.  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 fourth  quarter
ended March 31, 2001.

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

Listed  below are the names and ages of each of the present  executive  officers
and managers of the Company  together with the  principal  positions and offices
held by each as of the end of the Company's fiscal year ended March 31, 2001.
<TABLE>
<CAPTION>

                                 Age as of            Executive Offices Held             Period Served
           Name                March 31, 2001            With Company (1)                In Office (2)
           -----               --------------            ----------------                -------------
<S>                                  <C>         <C>                               <C>
Edward L. Machulak                   74          President, Chief Executive,
                                                 Operating and Financial Officer
                                                 Treasurer                          9/14/62 to present
                                                                                    06/78  to present
Edward A. Machulak                   49          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                        59          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,  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 & O'Dess, 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.

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  and  Treasurer  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 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; 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,  a developer  of an Internet  City Guide,  since  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 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

The Company's common shares were fully listed on the Boston Stock Exchange under
the symbol  "CMG" or  "CMG.BN,"  from  February  10, 1976 to January  29,  1999.
Trading was halted on January 29, 1999,  pending the  decision of the  Company's
appeal of Nasdaq's  delisting  of the trading of the  Company's  common  shares.
Currently the shares remain listed.

Since May 5, 1999, the Company's  common shares are being traded on the Over the
Counter Bulletin Board (OTCBB) under the symbol CGCO.

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,
2001 and the highest  and lowest  trade price  during each  quarter  through the
period ended March 31, 2000.
<TABLE>
<CAPTION>

For the period ended                                 March 31, 2001                 March 31, 2000
                                                   High           Low            High             Low
<S>                       <C>                  <C>            <C>           <C>              <C>
First quarter ending June 30                   $0.4375        $0.1562       $1.25000         $0.25000
Second quarter ending September 30             $0.2969        $0.1250       $1.40625         $0.40625
Third quarter ending December 31               $0.1719        $0.0469       $0.67000         $0.28125
Fourth quarter ending March 31                 $0.1250        $0.0625       $1.46875         $0.28125
</TABLE>

(b)  Approximate Number of Holders of Common Shares

As of March 31, 2001, the common shares were held by approximately 4,085
 shareholders; it is estimated that over  95% are United States' residents.

As of March 31, 2001,  there were  approximately  1,726 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 2,359.

As of March 31, 2001,  there were issued and  outstanding:  (a) 15,794,008
 shares of common stock;  and (b) 920,000 stock options to purchase  common
stock.

(c)  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,
2001.  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.




Item 6.  Selected Financial Data

The  following  table sets forth  certain  consolidated  financial  data for the
respective  periods  presented  and  should  be read  in  conjunction  with  the
Consolidated   Financial   Statements  and  the  related  notes   thereto,   and
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations:
<TABLE>
<CAPTION>

                               Year Ended March 31
                                        -------------------------------------------------------------------------------------------
                                                  2001            2000           1999           1998             1997
                                                  ----            ----           ----           ----             ----
Income statement data
<S>                                      <C>             <C>             <C>             <C>           <C>
Total revenue                            $     242,182   $     480,615   $    847,702    $ 1,295,908   $       59,009
                                         =============   =============   ============    ===========   ==============
Income (loss) from continuing
operations                               $     129,790    $  (396,232)  $    (90,266)   $    118,603   $      (5,141)
                                         =============    ============  =============   ============   ==============

Income (loss) from continuing operations per share:

  Basic                                      $           $     (.0326)        $            $           $      (.0006)
                                             =========   =============        =======      =========   ==============
                                                 .0092                        (.0081)          .0115
                                                 =====                        =======          =====
  Diluted                                    $           $     (.0282)       $     (       $           $      (.0005)
                                             =========   =============       ========      =========   ==============
                                                 .0086                         .0070)          .0100
                                                 =====                         ======          =====
  Weighted average shares - basic           14,174,662      12,172,867     11,165,127     10,358,132        8,136,286
                                         =  ==========  =   ==========  == ==========  == ==========  ====  =========
  Weighted average shares - diluted         15,094,662      14,053,002     12,813,368     11,783,532        9,727,646
                                         =  ==========  =   ==========  == ==========  == ==========  ====  =========
  Cash dividends per common share        $              $               $              $              $
                                         ==============================================================
                                                     0               0              0              0                0
                                                     =               =              =              =                =

Balance sheet data
  Working capital*1                      $     152,906   $     420,963  $     430,833  $     614,554   $     660,596
                                         =============   =============  =============  =============   =============
  Total assets                             $30,302,685     $29,856,201    $27,586,801    $25,799,651      $23,169,121
                                           ===========     ===========    ===========    ===========      ===========
  Short-term obligations*1                $  9,998,955     $10,231,272   $  8,911,087   $  7,270,772     $  6,029,195
                                          ============     ===========   ============   ============     ============
  Long-term obligations                  $              $               $              $     135,000    $     145,000
                                         ===========================================================    =============
                                                     0               0            0
                                                     =               =            =
  Shareholders' equity                     $20,303,730     $19,624,929    $18,675,714    $18,393,879      $16,994,926
                                           ===========     ===========    ===========    ===========      ===========
</TABLE>

*1   Although  the  majority of the  short-term  obligations  are due on demand,
     these obligations have the affect 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 commodity 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
the three years ended March 31, 2001, 2000 and 1999 and the financial condition,
liquidity and capital  resources for the same three-year  period.  The financial
statements of the Company and the notes  thereto  contain  detailed  information
that should be referred to in conjunction with this discussion.

Restatement of Prior Period Financial Statements

Accounting Overview

A redefined  structure of the  financial  statements  for the fiscal years ended
March 31, 2001,  2000 and prior years  reflects and includes the Commerce  Group
Corp./Sanseb  Joint Venture (Joint  Venture) on a consolidated  basis.  Prior to
this  change,  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. 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. In effect, this restructuring modifies only the financial
reporting  and at the time that the profits for the gold  mining  operation  are
distributed,  the interest  earned on these  advances  will be paid first to the
Company prior to any profit  distribution  and pursuant to an agreement  entered
into by the joint venture parties.

For the fiscal year ended March 31, 2001,  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.

The Company's Current Status

Precious Metal Mining

The Joint  Venture  has  produced  gold from March 31,  1995  through its fiscal
period  ended  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.

Although  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.  There is also much  uncertainty at
this time  relative  to the price of gold which in the past  months  reflected a
wide range of price fluctuations.

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.

The Company has entered into a non-exclusive  independent consulting arrangement
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 the gold ore it is  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.  It has  suspended  exploring  the
potential  of the other  gold mine  prospects  identified  as the San  Felipe-El
Potosi  Mine  and its  extension  the El  Capulin  Mine.  An  application  for a
concession is pending. The Montemayor Mine and the Modesto Mine have been placed
on a standby  basis  pending the  Government  of El  Salvador's  decision on the
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 and it intends to commence this gold-mining
operation  as soon as adequate  funding is in place.  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 to conduct an exploration
program to develop additional gold ore reserves at the SSGM.

Since the Joint Venture in 1995 commenced  producing gold at the SCMP,  albeit a
very exiguous  operation,  and a forerunner of its greater goals,  the Company's
revenues, profitability and cash flow will be 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,
or political  and economic  conditions.  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.

The Internet Business

Historical Synopsis

The  Company on January  29,  1999,  announced  its plans to have its  51%-owned
subsidiary,  Ecomm  Group Inc.  (Ecomm),  enter  into the web  portal  business.
Ecomm's  objective  was and still is to become a  recognized  web  portal on the
world wide web by  acquiring  or  "rolling-up"  Internet  websites.  Interactive
Business  Channel,  Inc.  (IBC)  had  agreed to assist  Ecomm in  developing  an
"Internet web portal roll-up strategy" by acquiring Internet businesses. In this
connection,  the President of IBC, Matthew Marcus,  was elected as the President
of Ecomm.

Ecomm had been developing its new  MyInternet.to  web portal since January 1999.
On July  26,  1999,  the  Company  announced  that  Ecomm  launched  the site at
http://www.myinternet.to.

Since July 1999, Ecomm's MyInternet.to web portal had been tested, marketed, and
updated to maximize its market share on the  Internet.  The website had a static
link to the highly trafficked http://www.ibchannel.com website.

MyInternet.to  had  implemented  a  broad  reaching  affiliate  program  through
Linkshare.com  which should have enabled it to derive  revenues  from  affiliate
agreements  with  small  and  large  Internet  websites.   In  addition,   these
affiliations  should  have drawn more  traffic and  interest to this site.  Such
websites included Yahoo Travel, Audio Book Club, JC Penney, Dell, and many, many
more.

MyInternet.to  had  been  designed  as a  platform  to  take  advantage  of  new
opportunities to derive financial benefit for Ecomm from the  implementation and
integration of new Internet technologies, mergers, and acquisitions.

Current Internet Activities

The Company  believes that IBC and/or Mr.  Matthew Marcus were not meeting their
contractual  obligations.  Therefore  the  Company and Ecomm  decided  that they
should  discontinue  their  relationship.  On June 14, 2000 the Company's  legal
counsel filed a complaint in the State of Wisconsin,  Circuit  Court,  Milwaukee
County, as plaintiffs,  against IBC and Matthew Marcus (the President of IBC and
Ecomm).  The  details of this  lawsuit  were  explained  in the  Securities  and
Exchange Commission Form 8-K dated June 14, 2000 and filed on June 29, 2000.


On July 31, 2000,  the Company and Ecomm entered into a Settlement,  Rescission,
and Mutual Release Agreement with Interactive  Business Channel,  Inc. (IBC) and
Mr. Matthew Marcus, as an individual.  Reference is made to "Part II - Financial
Information, Item 1. Legal Proceedings" of the Company's September 30, 2000 Form
10-Q filing for details.

The Company intends to remain in the Internet  business and is in the process of
formulating  its  future  plans.   The  Company   believes  that  a  significant
opportunity  exists to develop and  consolidate  the many niches of the Internet
community into a web portal. With new management it will evaluate, structure and
attempt  to  combine   Internet-related   business  combinations,   mergers  and
acquisitions.  This is an ideal time for the Company to pursue its objectives as
the Internet  industry is going through a "shake-down"  process which could mean
more realistic valuations and more favorable negotiations.

There can be no assurance  that Ecomm's  current  strategy will be successful as
the current  depressed  market price of the Company's  common  shares  presently
compels  it from  using  its  shares in an  exchange  for an  acquisition  of an
Internet company because of substantial dilutive effect it would have. Ecomm has
not yet entered into any  agreements for the  acquisition  of any websites,  web
services or other  technology  in  connection  with the web portal.  There is no
assurance  that it will be able to enter into  contracts for the  acquisition of
such sites,  services  and  technology  on terms  acceptable  to the Company and
Ecomm.  The Internet  business is highly  competitive  and there is no assurance
that Ecomm will  generate a profit,  even if Ecomm  acquires the  websites,  web
services and technology on acceptable terms.

Results of Operation for the Fiscal Year Ended March  31, 2001 Compared to
 March 31, 2000 on a Restated Basis
------------------------------------------------------------------------------

The Company, on a consolidated basis,  including the Joint Venture and excluding
the interest income due from the Joint Venture,  had a net profit of $129,790 or
$.0092 per share for this fiscal year  compared to a net loss of  ($396,232)  or
($.0326) per basic share for its fiscal year ended March 31,  2000.  This profit
for the fiscal year was  primarily  from the sale of real estate.  The Directors
decided  that it would be in the best  interest of the Company to reduce debt by
selling the encumbered  non-income producing assets.  Without this net profit of
$163,050,  there would have been a loss of ($33,260).  Depreciation  of $320,491
contributed  substantially to the 2000 year loss. In fiscal 2001 there was no El
Salvador added value tax refund recorded as income whereas in 2000,  $86,411 was
refunded.

The Joint Venture  suspended its gold mining and  processing  due to its need to
rehabilitate,  overhaul,  and expand the SCMP, and due to the continuous decline
and instability in the price of gold.

There was no current or deferred  provision  for income  taxes during the fiscal
period  ended March 31,  2001 or 2000.  Additionally,  although  the Company has
operating tax loss carryforwards,  the Company has not previously recorded a net
deferred  tax  asset  due  to an  assessment  of  the  "more  likely  than  not"
realization criteria required by Statement of Financial Accounting Standards No.
109, Accounting for Income Taxes.

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.

Inflation did not have a material impact on operations in the fiscal years
ended March 31, 2001 or 2000.  Management of the Company  anticipates  that
inflation will have an impact on continuing operations.

Interest  expense in the sum of $1,063,468 was  capitalized by the Joint
Venture during this fiscal period compared to $923,726 for the same period in
2000.

Almost all of the costs and expenses  incurred by the Company are  allocated and
charged to the Joint  Venture.  The Joint Venture  capitalizes or expenses these
costs and expenses and will continue to do so until such time when it is in full
production on each of its mining  projects.  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, 2000 Compared to
March 31, 1999 on a Restated Basis
-------------------------------------------------------------------------------

The Company, on a consolidated basis,  including the Joint Venture and excluding
the interest income due from the Joint Venture,  had a net loss of ($396,232) or
($.0326) per basic share for its fiscal year ended March 31, 2000  compared to a
loss of ($90,266) or ($.0081) per share for the same previous  fiscal year. This
2000 increased loss results  primarily from the depressed sale price of gold and
the fact that less gold was produced  and sold.  Depreciation  expense,  for the
fiscal year ended March 31,  2000,  was  $320,491  compared to $338,797  for the
period ended March 31, 1999. The other income and the income derived from the El
Salvadoran  added tax value  refund of $86,411 for 2000 and  $213,491  for 1999,
reduced the losses.

During the nine-month  period of gold processing,  the Company sold 1,499 ounces
of gold and 463 ounces of silver at an average  realized price of $276 an ounce,
for a gross total of $413,712. This compares with producing 2,684 ounces of gold
and 836 ounces of silver produced during its twelve-month period ended March 31,
1999, for a total of $785,526. In addition, the Joint Venture held approximately
100 ounces of gold in its  inventory  valued at $28,000  compared  to a value of
$75,324 for the same period in 1999. The Joint Venture suspended its gold mining
and processing due to its need to  rehabilitate,  overhaul,  and expand the SCMP
and the continuous decline and instability in the price of gold.

Financing Activities, Liquidity and Capital Resources

During this fiscal  period ended March 31, 2001,  the Company  reduced the notes
payable by a sum of $2,056,063 as follows:  the sale of the Company's restricted
common  shares  and  land to  related  parties  reduced  the  notes  payable  by
$1,532,050;  and the fulfillment of the Company's obligation to issue restricted
common shares to an unrelated party reduced the debt by $524,013.

A total of 2,405,079 common shares were issued for a sum of $837,461 during this
fiscal  period.  These  shares were  issued for the  following:  618,500  shares
($69,850) for Director,  Officer,  and employee  compensation;  1,586,579 shares
($747,611) for payment of debt; and 200,000 shares ($20,000) for cash.

The Joint Venture has suspended  its SCMP  operations  until such time as it has
adequate  funding to repair,  retrofit  and expand the mill to process  its gold
ore.  After almost five years of operation with used  equipment,  the facilities
require a major  overhaul.  The 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. A sum of U.S. $16 million would start the open-pit,  heap-leach at a
rate of 2,000 tons per day and the anticipated  profits and cash flow then could
be used to expand the operation to 6,000 tons per day.

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  be  required  to  borrow  funds  by  issuing
open-ended,  secured,  on-demand or unsecured promissory notes or by selling its
shares to its directors,  officers and other interested investors or by entering
into a joint venture or merging 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
continue to modify, overhaul, retrofit, and expand the SCMP or for its open-pit,
heap-leach operation.

The Company  estimates that it will need up to U.S. $16 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  would  be  113,000  ounces  of  gold  at the  SSGM.  The  use of the
$16,000,000  proceeds  is as  follows:  $8,000,000  for mining  equipment  and a
crushing  system;   $3,033,548  for  the  processing   equipment  and  site  and
infrastructure  costs;  and  $4,966,452  for the working  capital.  The existing
depressed price of gold and the Company's  unbelievably  low common share market
price are major deterrents in raising cash for the Company's programs.



Therefore,  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  should be placed on a standby basis
until the price of gold is at a level to warrant the investment.  These programs
will  involve  airborne  geophysics,   stream  chemistry,   geological  mapping,
trenching,  drilling,  etc. The Joint  Venture  believes  that it may be able to
joint venture these exploration costs with other entities.

From  September 1987 through March 31, 2001, the Company has advanced the sum of
$32,519,136 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  $33,109,401.  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 Modesto Mine, the
Hormiguero  Mine, and the Montemayor  Mine, for SSGM  infrastructure,  including
rewiring  and  repairing  about two  miles of the  Company's  electric  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 and many other related needs.

Employees

As of March 31, 2001,  the Joint  Venture  employed  approximately  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  it  was  the  largest   single
non-agricultural  employer in the El Salvador  Eastern Zone.  Also,  the Company
employs  approximately  four persons (plus 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 to its employees and therefore it had 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, 2001,  the Company,  and three of its
subsidiaries,  have advanced to the Joint Venture  $33,109,401.  Included in the
total advances is the interest charged to the Joint Venture by the Company which
amounts to $16,973,241  through March 31, 2001. The Company furnishes all of the
funds required by the Joint Venture. This interest charge is eliminated in these
financial statements.

Efforts to Obtain Capital

Since the  concession  was granted,  and through the present  time,  substantial
effort is exercised in securing  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 war.  Presently,  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 price
of gold to a 20-year low  depressed  the public  market  price of the  Company's
shares as well as the shares of most of the world-wide  mining  companies.  This
decline in the Company's stock market price places the Company in a situation of
substantially  diluting its common shares in order to raise 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.

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.

Dividends

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

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
or Internet  activities.  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.



















55

Item 8.  Financial Statements and Supplementary Data
<TABLE>
<CAPTION>

                                                          Index to Consolidated Financial Statements
                                                               And Supplementary Financial Data

                                                                                                                Page

<S>                                                                                                           <C>
Report of Independent Public Accountant........................................................................44

Financial Statements:

Consolidated Balance Sheets, Years Ended March 31, 2001 and 2000...............................................45
Consolidated Statements of Operations, Years Ended March 31, 2001, 2000 and 1999...............................46
Consolidated Statements of Changes in Shareholders' Equity
  Years Ended March 31, 2001, 2000 and 1999....................................................................47
Consolidated Statements of Cash Flows, Years Ended March 31, 2001, 2000 and 1999...............................48
Notes to Consolidated Financial Statements.....................................................................50

Supplementary Financial Data:

Report of Independent Accountant on the Financial Statements Schedules.........................................74

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.



</TABLE>

<PAGE>


                                        REPORT OF INDEPENDENT PUBLIC ACCOUNTANT



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

I have audited the  accompanying  consolidated  balance sheets of Commerce Group
Corp. ("Company"),  a Wisconsin Corporation,  and its subsidiaries,  as of March
31,  2001 and 2000,  and the  related  consolidated  statements  of  operations,
changes in  shareholders'  equity and cash flows,  for each of the three  fiscal
years in the  periods  ended  March 31,  2001,  2000 and 1999.  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 in accordance with auditing  standards  generally accepted
in the United States.  Those standards require that I plan and perform the audit
to obtain  reasonable  assurance  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.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  I  believe  that my  audits  provide  a  reasonable  basis for my
opinion.

In my opinion,  the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
Commerce Group Corp. and its subsidiaries as of March 31, 2001 and 2000, and the
consolidated  results of their  operations  and their cash flows for each of the
three  fiscal  years in the  periods  ended  March  31,  2001,  2000 and 1999 in
conformity with accounting principles generally accepted in the United States.

Bruce Michael Redlin, CPA, LLC
Certified Public Accountant



Milwaukee, Wisconsin
May 9, 2001


<PAGE>

<TABLE>
<CAPTION>

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

                                                                                       2001
                                                                           ----------------
                                                                                                       2000
                                                                                                       ----
                                                   ASSETS
 Current assets
<S>                                                                          <C>               <C>
   Cash                                                                      $       24,401    $     313,940
   Investments                                                                      232,068          232,068
   Accounts receivable                                                              275,465          275,162
   Inventories                                                                       39,562           67,562
   Prepaid items and deposits                                                        33,981           58,680
                                                                           ----------------  ---------------
     Total current assets                                                           605,477          947,412

 Real estate (Note 5)                                                                23,336        1,179,836
 Property, plant and equipment, net                                               3,376,422        3,039,127
 Mining resources investment                                                     26,297,450       24,401,376
 Other investments                                                                                   288,450
                                                                           ------------------------- -------
                                                                                          0
   Total assets                                                                 $30,302,685      $29,856,201
                                                                                ===========      ===========
                                                 LIABILITIES
 Current liabilities
   Accounts payable                                                           $     452,571   $     526,449
   Notes and accrued interest payable to related parties  (Notes 6 & 7)           5,610,380       5,992,633
   Notes and accrued interest payable to others (Note 6)                            720,572       1,204,239
   Accrued salaries                                                               2,288,015       1,839,015
   Accrued legal fees                                                               308,286         260,926
   Other accrued expenses                                                           619,131         408,010
                                                                           -------  -------  --------------
       Total liabilities                                                          9,998,955      10,231,272

 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
   2001-none; 2000-none (Note 10)                                                         $               $
                                                                                          0               0

 Common stock, $0.10 par value:
   Authorized 50,000,000 shares; (Note 10)
   Issued and outstanding:
   2001-15,794,008 (Note 10)                                                      1,579,401       1,388,893
   2000-13,888,929 (Note 10)
 Capital in excess of par value                                                  18,760,849      18,402,346
 Retained earnings (deficit)                                                       (36,520)       (166,310)
                                                                           ------- --------  --------------
     Total shareholders' equity                                                  20,303,730       19,624,929
                                                                            --   ----------  --   ----------
     Total liabilities and shareholders' equity                                 $30,302,685      $29,856,201
                                                                                ===========      ===========
</TABLE>

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


<PAGE>

<TABLE>
<CAPTION>

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


                                                                       2001              2000            1999
                                                                       ----              ----            ----
Revenues:
<S>                                                                       <C>                   <C>
  Gold sales                                                              $     $     413,713   $     785,526
                                                                          0
  Campground income                                                  75,470            66,902
                                                                                                       62,176
  Real estate sales - net profit                                    163,050
                                                            ------  -------
                                                                                            0               0
                                                                                            -               -
    Total revenues                                                  238,520           480,615         847,702

Expenses:
  Cost of gold sales                                                      0           376,007         601,111
  Depreciation                                                            0           320,491         338,797
  General and administrative                                        112,392           266,894         211,797
                                                            ------  -------  -------  -------  --------------
    Total expenses                                                  112,392           963,392       1,151,705

Other income:
  Interest income                                                     3,662               134             246
  El Salvador added value tax refund                                                   86,411         213,491
                                                            ---------------- -------   ------  --------------
                                                                          0
    Other income                                                      3,662            86,545         213,737
                                                            --------- -----  -------   ------  --------------

Net profit (loss)                                               $   129,790       $ (396,232)    $   (90,266)
  Credit (charges) for income taxes
                                                                          0                 0               0
                                                                          -                 -               -
Net income (loss) after income tax credit (charge)              $   129,790       $ (396,232)    $   (90,266)
                                                                ===========       ===========    ============

Net income (loss) per share (Note 2) basic                    $       .0092     $     (.0326)   $     (.0081)
                                                              =============     =============   =============

Net income (loss) per share (Note 2) diluted                  $       .0086     $     (.0282)   $     (.0070)
                                                              =============     =============   =============

Weighted av. common shares outstanding (Note 2)                  14,174,662        12,172,867      11,165,127
                                                                 ==========        ==========      ==========

Weighted av. diluted common shares (Note 2)                      15,094,662        14,053,002      12,813,368
                                                                 ==========        ==========      ==========

</TABLE>

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


<PAGE>

<TABLE>
<CAPTION>

                                                 COMMERCE GROUP CORP., ITS SUBSIDIARIES, AND THE JOINT VENTURE
                                                  Consolidated Statements of Changes in Shareholders' Equity
                                                       For the Years Ended March 31, 2001, 2000 and 1999


                                                     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, 1998                               11,039,670       $1,103,967      $16,969,724    $   320,188

Net income (loss) for FY March 31, 1999                                                               $  (90,266)

  Dir./off./employee/services comp.                      214,234           21,423           89,962
  Payment of debt                                        238,123           23,812          190,779
  Cash                                                    85,500            8,551           37,574      _________
                                                 -------  ------  --------- -----  ---------------
Balances March 31, 1999                               11,577,527       $1,157,753      $17,288,039    $   229,922

Net income (loss) for FY March 31, 2000                                                                $(396,232)

  Dir./off./employee/services comp.                    1,014,445          101,445          471,373
  Payment of debt                                        796,957           79,695          404,484
  Investments                                            500,000           50,000          238,450       ________
                                                 -----   -------  -----    ------  -----   -------
Balances March 31, 2000                               13,888,929        1,388,893       18,402,346     $(166,310)

Net income (loss) for FY March 31, 2001                                                                $  129,790

  Dir./off./employee/services comp.                      618,500           61,850            8,000
  Payment of debt                                      1,586,579          158,658          588,953
  Cash                                                   200,000           20,000                0
  Common shares cancelled                              (500,000)         (50,000)        (238,450)       ________
                                                 --    ---------  --     --------  --    ---------
Balances March 31, 2001                               15,794,008        1,579,401       18,760,849     $ (36,520)
                                                      ==========        =========       ==========     ==========

</TABLE>


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


<PAGE>
<TABLE>
<CAPTION>


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


                                                                                 2001            2000             1999
                                                                        -------------  --------- ----  --------   ----
Operating activities:
<S>                                                                         <C>           <C>              <C>
  Net income (loss)                                                         $ 129,790     $ (396,232)      $  (90,266)
                                                                            ---------     -----------      -----------
Adjustments  to  reconcile  net  income  (loss)  to net cash  used in  operating
activities:
Depreciation                                                                        0         320,491          338,797
Changes in assets and liabilities
  Decrease (increase) in account  receivables                                   (303)          83,607           93,765
  Decrease (increase) in inventories                                           28,000          88,860           48,877
  Decrease (increase) in prepaid items and deposits                            24,698         (9,003)            1,871
  Decrease (increase) in real estate                                        1,156,500               0                0
  Increase (decrease) in accounts payable and accrued liabilities             137,243          73,659           57,316
  Increase (decrease) in accrued salaries                                     449,000         165,000          165,000
  Increase (decrease) in accrued legal fees                                    47,359          63,787           22,058
                                                                        -------------  ------- ------  -------  ------
  Total adjustments                                                         1,842,497         786,401          727,684
                                                                        --  ---------  -----  -------  -----   -------
  Net cash provided by (used in) operating activity                         1,972,287         390,169          637,418

Investing activities:
  Investment in mining resources                                          (2,233,369)     (2,166,900)      (2,269,928)
  Investments - other                                                         288,450       (334,336)
                                                                        ----- -------  ---  ---------
                                                                                                                     0
  Total                                                                   (1,944,919)     (2,501,236)      (2,269,928)

Financing activities:
  Net borrowings                                                            (865,919)       1,017,739        1,260,943
  Common stock issued                                                         549,011       1,345,447          372,101
                                                                        ----  -------       ---------  ----    -------
Net cash provided by (used in) financing activities                         (316,908)       2,363,186        1,633,044

Net increase (decrease) in cash and cash equivalents                        (289,540)         252,119              534
Cash - beg. of year                                                           313,940          61,821           61,287
                                                                        ----- -------  ------- ------  ------   ------
Cash - end of year                                                       $     24,400     $   313,940      $    61,821
                                                                         ============     ===========      ===========
</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:

1.       The following amounts of interest expense paid or accrued were
capitalized:  $1,063,468 (2001), $923,726 (2000), and  $767,459 (1999).

2.       There was no interest expense paid in cash for the periods ended
 March 31, 2001 or 2000;  $8,838 was paid in 1999.

3.       The Company paid no income taxes during its fiscal periods ended
 March 31, 2001, 2000, and 1999.

4.       The investment  consists of securities  held for the Employee
Benefit  Account stated at cost and precious  stones,  which are stated at the
 lower of
         cost or market value.

5.       Accounts  receivable  consist  of an  amount  advanced  to  Misanse,  a
         52%-owned  Corporation,  which  will be an offset  for  rental  charges
         included in the accounts payable due to the Joint Venture.

6.       Inventory consists of consumable items which are stated at the lower of
 average cost or market.

Supplemental  schedule of non-cash investing and financing activities during the
fiscal years ended March 31:

1.       The Company issued the following common shares for the values shown for
         employee  severance  pay  and  benefits,  for  director  fees,  officer
         compensation and for other services rendered:

                                            Shares           Value
                               2001        618,500       $  69,850
                               2000      1,014,445        $572,818
                               1999        214,234        $111,385

2.       Other  non-cash  items were for the unpaid salary and director,
 officer and legal fees;  this amounted to $449,360 for 2001,  $228,787
for 2000,  and   $187,057 for 1999.

3.       There were no non-cash equipment financing activities in 2001, 2000,
 or 1999.




                                    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, 2001

(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   corporations   based  in  the  United   States,   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 continuous at the San
      Sebastian  Gold Mine ("SSGM") which is located near the city of Santa Rosa
      de Lima.  Exploration  is being  curtailed at other mining  projects until
      adequate funding and license permits are obtained.
      All of the mining  projects  are located in the  Republic of El  Salvador,
Central America.

      As of April 1, 2000 the Joint Venture  decided to temporarily  suspend the
      San Cristobal Mill and Plant ("SCMP") operations 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 a higher level.

      The Joint Venture is in the  pre-production  and development  stage at the
      SSGM and it simultaneously is performing separate programs. It did produce
      gold on a start-up  (not full  production)  basis,  and as of December 31,
      1999,  it  temporarily  ceased  operations  at its SCMP  which is  located
      approximately 15 miles from the SSGM site. It plans to begin its open-pit,
      heap-leaching  process on the SSGM site upon receipt of adequate funds. 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.  In addition,  it plans to explore the potential
      of other gold mine exploration prospects in El Salvador.  Concurrently, it
      also is in the  process of  obtaining  the  necessary  funding for each of
      these  separate  programs while its Joint Venture is erecting its crushing
      system at the SSGM site.

      The Company on January  29,  1999,  announced  its plans to  diversify  by
      having  (at that  time) its  wholly-owned  subsidiary,  Ecomm  Group  Inc.
      ("Ecomm"),  enter into the web portal business.  Ecomm's objective was and
      still is to  become a  recognized  web  portal  on the  world  wide web by
      acquiring or "rolling-up" Internet websites. Interactive Business Channel,
      Inc.  (IBC) had agreed to assist  Ecomm in  developing  an  "Internet  web
      portal roll-up strategy" by acquiring Internet businesses.

      Ecomm's  principal  business  was  to  evaluate,  structure  and  complete
      Internet-related  business  combinations,  mergers,  and acquisitions.  It
      planned to  concentrate  in  specialized  or niche portals which are being
      developed as hubs or gateways to the  Internet  for groups of  individuals
      with specific interests.

      Due to the lack of progress in meeting its goals, the Company,  after many
      attempts  to  prompt  IBC and its  President  Matthew  Marcus  to  perform
      according to the  agreements  dated January 29, 1999 and May 25, 1999, had
      its legal  counsel  file a  complaint  on behalf  of the  Company  and its
      51%-owned  subsidiary,  Ecomm Group Inc., as  plaintiffs,  against IBC and
      Matthew Marcus as defendants.

      Included in this complaint were the following three causes of action:  the
      first  cause of action was the  breach of  contract;  the second  cause of
      action was the breach of fiduciary duty; and the third cause of action was
      the rescission of the contract and return of compensation.


<PAGE>


                 COMMERCE GROUP CORP., ITS SUBSIDIARIES, AND THE JOINT VENTURE
                   Notes to the Consolidated Financial Statements (Continued)
                                                     March 31, 2001


      The plaintiffs  demanded  judgment against the defendants as follows:  for
      actual  damages  in an amount to be  determined  at  trial;  for  punitive
      damages in an amount to be  determined  at trial;  for  rescission  of the
      transaction  and return to the  plaintiffs  of 49% of the common  stock of
      Ecomm  Group Inc.  represented  by 96 common  shares and for the return of
      500,000 Commerce Group Corp. common shares, par value ten cents per share,
      issued as compensation for the services of IBC and Mr. Matthew Marcus; and
      for actual  attorney's  fees, the costs and  disbursements of this action,
      and any further relief the Court deems equitable and just.

      A copy of the said  complaint  was  filed as  Exhibit  A to the  Company's
Securities and Exchange Commission Form 8-K on June 29, 2000.

      On July 31,  2000,  the  Company  and  Ecomm  entered  into a  Settlement,
      Rescission,   and  Mutual  Release  Agreement  with  Interactive  Business
      Channel, Inc. and Mr. Matthew Marcus, as an individual.  Reference is made
      to the Company's  Securities and Exchange  Commission Form 10-Q filing for
      the quarterly  period ended  September 30, 2000, in "Item 2.  Management's
      Discussion  and Analysis of Financial  Condition and Results of Operation"
      and in "Part II Financial  Information,  Item 1. Legal  Proceedings" for a
      complete  description  of a lawsuit  that has been settled in favor of the
      Company.

      There  can  be  no  assurance  that  Ecomm's  current   strategy  will  be
      successful.  Ecomm  has  not  yet  entered  into  any  agreements  for the
      acquisition of any websites,  web services or other technology businesses.
      There is no assurance that it will be able to enter into contracts for the
      acquisition of such sites,  services and technology on terms acceptable to
      Commerce and Ecomm. The Internet business is highly  competitive and there
      is no assurance that Ecomm will be able to attract  traffic and generate a
      profit,  even if Ecomm acquires the websites,  web services and technology
      on acceptable terms.

(b)   Use of estimates

      The preparation of the financial statements, in accordance with accounting
      principles generally accepted in the United States, requires management to
      make estimates and assumptions  that affect the reported amounts of assets
      and liabilities and disclosure of contingent assets and liabilities at the
      date of the financial  statements and the reported amounts of revenues and
      expenses  during the reporting  period.  Actual  results could differ from
      those estimates.

(2)  Significant Accounting Policies

Restatement of Prior Period Financial Statements

The Company changed its consolidation  policy as of April 1, 1998 retroactive to
September  1987, to include the income and expenses and the assets,  liabilities
and equity of its Joint  Venture  rather  than show it as an  investment  on the
balance  sheet.  As of March 31, 2001,  the  consolidated  balance  sheets,  the
consolidated statements of operations, the consolidated statements of changes in
shareholders'  equity,  and the consolidated  statements of cash flows were also
restated to reflect these changes.

The balance sheet effect of the change in policy was to reduce the Joint Venture
advances  by the  amount of  interest  charged  to the Joint  Venture.  Retained
earnings  were reduced by the same  offsetting  amount for the same period.  The
consolidated statements of changes in shareholders' equity were also restated to
reflect these changes.

The  consolidated  statements  of operations  through  March 31, 2001 were
 restated to eliminate the net interest  income earned by the Company from
the Joint Venture.

The  consolidated  statements  of cash flows were also  restated  to reflect the
changes in operating profits or losses.

Principles of Consolidation

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>
                                                                                               % Ownership
<S>                       <C>                                                                        <C>
Homespan Realty Co., Inc. ("Homespan")                                                               100.0
Mineral San Sebastian, S.A. de C.V.  ("Misanse")                                                      52.0
Ecomm Group Inc. ("Ecomm")                                                                           100.0
San Luis Estates, Inc. ("SLE")                                                                       100.0
San Sebastian Gold Mines, Inc. ("Sanseb")                                                             82.5
Universal Developers, Inc.  ("UDI")                                                                  100.0
Commerce/Sanseb Joint Venture ("Joint Venture")                                                       90.0
</TABLE>

Investments

The  investments  consist of securities  held for the Employee  Benefit
Account stated at cost and of precious stones which are stated at the lower of
 cost or market value.

Accounts Receivable

The accounts receivable primarily consists of the amount advanced to Mineral San
Sebastian,  S.A. de C.V.  (Misanse)  which will be offset for the rental charges
included in the accounts payable due to the Joint Venture.

Intercompany Balances

All intercompany balances and transactions have been eliminated.

Inventory

Inventory consists of consumable supplies.

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 and industrial  minerals is recognized  when title
passes to the buyer.

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 expense include the amortization of assets
acquired  under  capital  leases.   Replacements  and  major   improvements  are
capitalized.  Maintenance  and repairs  are 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 it also ceased to depreciate most of 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.

Statement of Financial Accounting Standards

The Company  evaluates the carrying value of producing  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.  SFAS 121 requires that an impairment loss be
recognized  when the  estimated  future  cash flows  (undiscounted  and  without
interest) expected to result from the use of an asset are less than the carrying
amount of the asset. Measurement of an impairment loss is based on fair value of
the asset if the asset is expected to be held and used,  which would be computed
using discounted cash flows. Measurement of an impairment loss for an asset held
for sale would be based on fair market value less estimated costs to sell.

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.


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 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.

If on March 31, 2001, 920,000 option shares were added to the weighted number of
shares which amount to  14,174,662  common shares  issued and  outstanding,  the
total number of fully diluted shares would amount to 15,094,662.  The income per
share for this  period  ended  March 31,  2001,  would then be $.0086  cents per
share. The same assumptions were used for the same 2000 fiscal period.

Foreign Currency

The Company is involved in foreign  currency  transactions  as it deposits  U.S.
funds  primarily  through bank wire transfer of funds from its U.S. bank account
into the Joint  Venture's  El  Salvador  bank  accounts.  The Joint  Venture  is
obligated to repay the Company for funds advanced in U.S.  dollars.  El Salvador
has a freely  convertible  currency  that  traded in this past fiscal year about
8.75 colones per U.S.  dollar.  This  exchange rate has been fairly stable since
1994. In this environment,  based on the free convertibility of colones, foreign
businesses have no problem making remittances of profits,  repatriating  capital
or bringing in capital for  additional  investments.  There is no  hindrance  in
exchanging dollars for colones or vice versa. As of January 1, 2001, El Salvador
has adopted the U.S.  dollar system and pegged the exchange rate at 8.75 colones
to one U.S. dollar.

Major Customer

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, 2001                                    March 31, 2000
                           ---------------------------------------------------------------------------------------------------
                                            Accumulated                                       Accumulated
                               Cost         Amortization         Net            Cost          Amortization          Net
<S>                        <C>               <C>            <C>             <C>                 <C>           <C>
Mineral   Properties  and
Deferred Development       $26,297,450                      $26,297,450     $24,401,376                        $24,401,376

Property, Plant and
Equipment                      5,822,021      2,445,599         3,376,422       5,353,046       2,313,919          3,039,127
                           -------------  --  ---------     -------------   -------------  --   ---------      -------------
                           $32,119,471       $2,445,599     $29,673,872     $29,754,422        $2,313,919      $27,440,503
                           ===========       ==========     ===========     ===========        ==========      ===========
</TABLE>

Production  facilities and equipment are stated at cost and are amortized  based
on the lease arrangement, if any, and salvage value. Vehicles, office equipment,
laboratory equipment, and buildings 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. With  respect to  properties  with proven
reserves,  an impairment loss is recognized when the estimated future cash flows
(undiscounted and without interest) expected to result from the use of the asset
are less than the carrying  amount of the asset.  Measurement  of the impairment
loss is based on discounted cash flows.  Properties  with unproven  reserves are
assessed for impairment when changes in market  conditions or other events occur
and are measured based on fair 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 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, 2001, the Company's investments,  including charges for interest
expense  to the Joint  Venture,  were  $32,519,136  and  three of the  Company's
subsidiaries' advances were $590,265 for a total of $33,109,401.

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, 2001 and 2000,  the Company,  Sanseb and three of the
 Company's  subsidiaries  have invested  (including  carrying  costs) the
 following in its Joint Venture:
<TABLE>
<CAPTION>

                                                                                       2001           2000
                                                                                       ----           ----
<S>                                                                                <C>             <C>
The Company's advances (net of gold sale proceeds) since 09/22/87                   $32,519,136     $27,346,238
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
                                                                                     29,505,884      26,368,951
Total:                                                                               69,041,380      60,731,549
Advances by the Company's three subsidiaries                                            590,265         590,265
                                                                                ------- -------  --------------
Combined total investment                                                           $69,631,645     $61,321,814
                                                                                    ===========     ===========
</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 on
this  site.  The  Joint  Venture  is also  engaged  in the  exploration  and the
expansion  program  to  develop   additional  gold  ore  reserves  in  the  area
surrounding  the minable gold ore reserves and it is erecting its cone  crushing
system.

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 July 28,  1975,  an amended  lease  agreement  between  Misanse as lessor and
Sanseb as tenant was signed by the parties giving the tenant all the possessions
and mining  rights that  pertain to the SSGM as well as other  claims to mineral
rights  that may already  have or could be claimed in the future  within the 595
hectares  (1,470 acres) plat of land  encompassing  the SSGM. The 25-year lease,
which  begins on the date gold  production  begins,  was further  amended to run
concurrently  with the  concession  described  herein and may be extended for an
additional  25 years by the  tenant as long as the  tenant has paid the rent and
has complied  with other  obligations  under the lease and the  concession.  The
lease also provides that the tenant will pay rent  equivalent to five percent of
the gross gold  production  revenue  obtained  from the leased  SSGM and further
commits itself to maintain production taking into consideration market and other
conditions.  In no case will the rent be less  than  1,800  "colones"  per month
(approximately  $206 per month at the current rate of exchange).  The lease also
provides  that,  in the event the lessor  wishes to sell the  property,  it must
first give preference to the tenant;  the lease further provides that the tenant
must give preference to employ former mining employees and Misanse shareholders,
providing  they qualify for the  available  position.  The lease  agreement  was
assigned on January 29, 1987 to the Company and Sanseb  together with the mining
concession application and subsequently was pledged as collateral for loans made
by related parties. (Note 7)

The lease is freely  assignable by the Joint Venture  without notice to Misanse.
The lease may also be canceled by the Joint  Venture on thirty  days'  notice to
Misanse, and thereafter, all legal responsibilities thereunder shall cease.

(c)  Mineral Concession

On July 23, 1987,  the  Government  of El Salvador  granted and delivered to the
Company's 52%-owned  subsidiary,  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.  The  concession was pledged as collateral for
loans made by related parties. (Note 7)

Effective  February  1996,  the  Government  of El  Salvador  passed a law which
requires  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. The Company, in compliance
with the new law,  has,  or will  file its  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 east of
the SSGM site.  The basic annual lease  payment is U.S.  $11,500  (payable in El
Salvador  colones at the then current  rate of  exchange),  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 is subject to increases based
on any United States' inflationary rate adjustments.

Modesto Mine

(a)  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")

(a)  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 and under the following basic
terms and conditions:

1.   The lease  payment  will be five  percent of the gross  receipts
 derived  from the  production  of  precious  metals from this site which wil
l be payable
     monthly.

2.   The Joint  Venture will advance to the  Cooperative  the funds  required to
     obtain the mining  concession  from the El Salvador  Department  of Energy,
     Mines and  Hydrocarbons  and all related  costs which will be reimbursed or
     will become a deduction from future rental payments.

3.   The Joint Venture will, when it is in production,  employ not more than
45 qualified  members of the Cooperative  providing that there is a need for
their
     particular skill or service.

4.   The Joint Venture will furnish medicine and first aid medical assistance to
     all of its  employees to the extent that such  benefits are not provided by
     the Salvadoran Social Security System.

5.   An employee  life  insurance  program is to be seriously  considered by the
     Joint Venture when  production  commences,  providing that the cost of such
     insurance is not excessive.





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 leases approximately 175 acres in the Department of Morazan in the
Republic of El Salvador.

(6)  Notes Payable and Accrued Interest

                                                03/31/01           03/31/00
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  undeveloped  land,  real estate and all other  assets
owned by the Company, its subsidiaries and the Joint Venture as collateral (Note
7)
                                        $5,610,380         $5,992,633
Other

Short-term  notes and accrued  interest (March 31, 2001,  $382,625 and March 31,
2000,  $342,279)  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.
                                                 720,572          1,204,239
                                    -----        -------   --     ---------

                            Total:             $6,330,952         $7,196,872
                                               ==========         ==========

(7)  Related Party Transactions

The Company,  in an attempt to preserve  cash, had prevailed on its President to
 accrue his salary for the past 20 years,  including  vacation pay, for a total
of $2,279,015.

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, 2001:

The amount of funds which the Company has borrowed from its President  from time
to time, together with accrued interest, amounts to $3,676,503. 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,  as of March 31,  2001,  an  aggregate  of  $599,768,
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 August 14, 2000,  the  Directors,  in order to reduce  corporate  debt and to
provide  liquidity  to the ELM RIRA,  authorized  the Officers of the Company to
sell to it, a total of 600,000 of the  Company's  restricted  common shares at a
price of twenty-five  cents a share (the market price during the period of April
1, 2000 through  August 14, 2000 ranged from a low of $.16 to a high of $.50 per
share).  On  December  7,  2000,  the  payment  for these  shares  was made by a
reduction  of  $150,000  of the debt  owed to the ELM  RIRA.  In  addition,  the
Directors  authorized  the Officers of the Company to negotiate  the sale of its
non-income  producing  asset (all of the precious stones and jewelry) to the ELM
RIRA at the  Company's  book value of $172,100,  which  payment would reduce the
amount due to the ELM RIRA.  Also, the Directors  acknowledged  that as of March
31,  2000,  19  months  of  vacation  pay was  due to the  President,  and  this
transaction  was recorded on the Company's  records  during the third quarter of
this fiscal year. An additional  month of vacation pay was added as of March 31,
2001, for a total of twenty months of vacation pay.

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  returned all of the 110,000 common shares borrowed from him during this
fiscal year and the 984 common shares due to him for accrued interest by issuing
the same number of restricted common shares. It may owe additional common shares
for such shares loaned or pledged by him for  collateral  purposes to others for
the benefit of the Company,  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, 2001:

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 data processing
equipment, 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 the Joint Venture's mining needs.

This related company has been issued an open-ended,  secured,  on-demand
 promissory  note which amounts to $926,205;  the annual interest rate is
 four percent
plus the prime rate, but not less than 16%, and it is payable monthly.

On January 10, 1997,  four-year stock options were issued to the related company
to purchase 68,000 of the Company's restricted common shares at a price of $3.00
per share. These stock options were not exercised and have expired.  On July 12,
1999,  two-year  stock  options  were issued to the related  company to purchase
500,000 of the Company's restricted common shares at a price of $.50 per share.

On August 14, 2000, the Directors, in order to reduce corporate debt, authorized
the Officers of the Company to negotiate  the sale of its  low-income  producing
asset, the Standing Rock Campground  (SRC), to GLSCO in exchange for a reduction
of $1,249,050 of the debt owed to GLSCO.  The agreement has a condition  that if
SRC were sold by GLSCO to an  unrelated  third party during a period of one year
for a sum exceeding  GLSCO's purchase price,  the difference,  after taking into
account all selling expenses,  would be applied to reduce the balance of GLSCO's
promissory  note.  In the event the selling price to a third party would be less
than  GLSCO's  purchase  price,  then an addition  would be made to the existing
balance of GLSCO's  promissory  note.  Also,  adjustments  would be made for the
interest  due to  GLSCO  during  this  period  of  time.  This  transaction  was
consummated.

The Company's  Directors have consented and approved the following  transactions
of which the status of each are reflected as of March 31, 2001:

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 $312,459
which bears interest at an annual rate of prime plus three percent, but not less
than 16% and the interest is payable monthly.

On August 14, 2000, the Directors, in order to reduce corporate debt, authorized
the Officers of the Company to negotiate  the sale of its  non-income  producing
assets to the SM RIRA in exchange for the reduction of debt owed to the SM RIRA.
It was agreed to sell to the SM RIRA, 43 parcels of land located in the San Luis
North  Estates  Subdivision  for  a  sum  of  $64,500,  12  lots  consisting  of
approximately  one acre located in Fort Garland,  Colorado for the sum of $6,000
and 250,000 of the Company's restricted common shares at a price of $.25 a share
or $62,500.  Pursuant to a Directors' resolution adopted on August 14, 2000, the
following  transactions  were  concluded:  on  December  7,  2000,  the SM  RIRA
purchased 250,000 of the Company's restricted common shares at a price of $.25 a
share,  and during the fiscal period the SM RIRA consummated the purchase of all
of the Costilla County parcels of land as described above.

The Directors  also have  acknowledged  that Mrs.  Sylvia  Machulak (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.  This  transaction was recorded on the Company's
records during this fiscal year as an accrual.

The Law Firm which  represents  the Company in which a son of the President is a
principal  is owed the sum of  $308,286  for  1,868.4  hours  of legal  services
rendered from July 1980 through March 31, 2001. By agreement,  these fees are to
be adjusted to commensurate  with the hourly fees charged by the Law Firm on the
date of payment.

The son of the President and his son's wife have the Company's  open-ended,
 on-demand  promissory note in the sum of $95,445 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 274,000  common  shares in lieu of any cash
compensation for all amounts due to them as of March 31, 2001.

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 on a full  production  basis.  When full  production  commences,  these
capitalized  costs will be charged as an expense  based on a per ton  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  demonstrating
what is due to the Company.
<TABLE>
<CAPTION>

Company Net Advances to the Joint Venture
                                                                              Total Advances       Interest Charges
<S>                                                                              <C>                    <C>
Balance March 31, 2000                                                           $27,346,328            $13,049,585
  Advances during fiscal year ended March 31, 2001                                 5,172,808              3,923,656
                                                                       ----        ---------   ----       ---------
  Total Company's net advances                                                    32,519,136             16,973,241
  Advances by three of the Company's subsidiaries                                    590,265                      0
                                                                       -------       -------   ------------------ -
  Total net advances as of March 31, 2001                                        $33,109,401            $16,973,241
                                                                                 ===========            ===========
</TABLE>

(8)  Commitments

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

(9)  Income Taxes

At March  31,  2000,  the  Company  and its  subsidiaries,  excluding  the Joint
Venture, have estimated net operating losses remaining in a sum of approximately
$4,580,120 which may be carried forward to offset future taxable income; the net
operating losses expire at various times to the year of 2015.


(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  15,794,008  shares were issued and  outstanding  as of
March 31,  2001.  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, 2001 or 2000.

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.  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 during 2001, 2000, and 1999 was as follows:
<TABLE>
<CAPTION>

                                     03/31/01                    03/31/00                    03/31/99
                             ------------------------------------------------------------------------------------
                                            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.           1,254,900     $2.19          977,400     $3.28          1,327,400     $3.42
Granted                           150,000     $0.12          660,000     $0.50             70,000     $0.75
Exercised                               0      N/A         (160,000)      N/A                   0      N/A
Forfeited                               0      N/A                 0      N/A                   0      N/A
Expired                         (484,900)      N/A         (222,500)      N/A           (420,000)      N/A
                                ---------      ---         ---------      ---           ---------  -   ---
Outstanding, end of yr.           920,000     $1.27        1,254,900     $2.19            977,400     $3.28
                             ===  =======     =====        =========     =====      ===   =======     =====
</TABLE>

A summary of the outstanding stock options as of March 31, 2001, follows:
<TABLE>
<CAPTION>

                                            Weighted Average
 Range of Exercise         Amount        Remaining Contractual       Weighted Average
       Prices            Outstanding              Life                Exercise Price
<S>       <C>               <C>                <C>                        <C>
    Up to $2.99             720,000            1.20 years                 $0.44
   $3.00 to $5.00           200,000            0.82 years                 $4.25
</TABLE>

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,  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  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, 2001, there were no shares due to other parties for shares
borrowed or for interest payment.

On June  1,  1998  correspondence,  together  with a loan  agreement,  had  been
submitted  to  a  lender  for  execution  in   connection   with  the  Company's
understanding of a stock loan arrangement.  The lender verbally acknowledges the
loan  agreement  and the terms and  conditions.  The Company  borrowed  from the
lender  125,300 common shares of a non-related,  publicly-held  corporation  and
sold them for  approximately  $524,013.  The lender had, until January 15, 2000,
the option of  demanding  payment of the  principal  amount of the stock loan in
return for the 125,300  shares  borrowed  plus interest in the form of 64,845 of
the Company's restricted common shares or the lender could accept payment in the
form of a total of 625,595 of the Company's restricted common shares. On January
15, 2000, via written correspondence,  the lender exercised his option to accept
the 560,750  Commerce Group Corp.  restricted  common shares in full payment for
the Company's outstanding obligation. After the Company received the appropriate
agreements, it caused its transfer agent on October 23, 2000 to issue 625,595 of
the Company's  restricted common shares in full payment of the amount due to the
lender.

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

On January 26, 2000, the Company filed its  Securities  and Exchange  Commission
Form S-8 Registration  Statement No. 333-95397 under the Securities Act of 1933,
to register  1,000,000  of the  Company's  $0.10 par value  common stock for the
purpose of distribution  of the shares  pursuant to the prospectus  submitted to
the Securities and Exchange Commission. As of March 31, 2001, from the 1,000,000
shares registered 800,376 were issued, and 199,624 shares remain to be issued.

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

This account was established  for the purpose of compensating  the 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.  Under this plan,  payment can be made to any
employee of the Company or the Company's  subsidiaries.  The Company on December
10, 1999,  issued 400,000 of its common shares  registered in its Securities and
Exchange Commission Form S-8 Registration  Statement.  Subsequently,  on January
26, 2000,  it issued an  additional  400,000  common  shares  registered  in its
Securities and Exchange Commission Form S-8 Registration  Statement.  The CGCEBA
has sold some of these shares from time to time to meet its  obligations  to its
El Salvadoran employees.  There remain 150,000 of the Company's common shares in
the account as of March 31, 2001.

(11)  Litigation

On June 14, 2000,  Commerce Group Corp.'s legal counsel filed a complaint in
the State of Wisconsin,  Circuit Court,  Milwaukee  County,  Case No.
  00CV004805,
Money  Judgment:  30301,  on behalf of Ecomm Group Inc. (a 51%-owned
Commerce  Group Corp.  subsidiary)  and  Commerce  Group Corp.,  as
 plaintiffs,  against
Interactive Business Channel (IBC) and Matthew Marcus, as an individual,
 both of Irvine California, as defendants.

Included in this complaint were the following three causes of action:  the first
cause of action was the breach of  contract;  the second cause of action was the
breach of fiduciary  duty;  and the third cause of action was the  rescission of
the contract and return of compensation.

The plaintiffs  demanded judgment against the defendants as follows:  for actual
damages  in an amount to be  determined  at trial;  for  punitive  damages in an
amount to be determined at trial;  for rescission of the  transaction and return
to the plaintiffs of 49% of the common stock of Ecomm Group Inc.  represented by
96 common  shares and for the  return of 500,000  Commerce  Group  Corp.  common
shares,  par value ten cents per share,  issued as compensation for the services
of IBC and Mr. Matthew  Marcus;  and for actual  attorney's  fees, the costs and
disbursements  of the action,  and any further relief the Court deemed equitable
and just.

A copy of the said complaint was filed as Exhibit A to the Company's  Securities
and Exchange Commission Form 8-K on June 29, 2000.

On July 31, 2000,  the Company and Ecomm entered into a Settlement,  Rescission,
and Mutual Release  Agreement with Interactive  Business  Channel,  Inc. and Mr.
Matthew Marcus, as an individual.  A notice of dismissal was subsequently  filed
with the Circuit  Court of  Milwaukee  County,  State of  Wisconsin on August 4,
2000. Reference is made to the Company's Securities and Exchange Commission Form
10-Q filing for the  quarterly  period ended  September  30,  2000,  in "Item 2.
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operation" and in "Part II - Financial  Information,  Item 1. Legal Proceedings"
for a complete  description  of a lawsuit  that has been settled in favor of the
Company.

(12) Commitments and Contingencies

Based upon current knowledge, the Company believes that it is in compliance with
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.







(13) 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  has  presently  three  reportable  segments:   mining,  campground
operation,  and other. The mining segment was engaged in the processing of gold.
The  campground  operation  is to lease  space on an annual,  monthly,  or daily
basis.  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,            Campground
                                        Central America       Missouri, U.S.A.        Corporate Headquarters
Year ended March 31, 2001
<S>                                    <C>                           <C>                     <C>
  Sales and revenues                   $                0            $    189,020            $ 53,162
  Depreciation & amortization                           0                       0                      0
  Operating income (loss)                               0                 146,349              (16,559)
  Total assets                                 30,046,855                       0             255,830
  Capital expenditures                          2,233,369                       0                      0

Year ended March 31, 2000
  Sales and revenues                        $     413,713            $     66,902               $            0
  Depreciation & amortization                     320,491                       0                      0
  Operating income (loss)                       (384,759)                (11,473)                      0
  Total assets                                 27,831,734               1,135,500              888,967
  Capital expenditures                          2,166,900                       0                      0

Year ended March 31, 1999
  Sales and revenues                         $    785,526            $     62,176               $            0
  Depreciation & amortization                     338,797                       0                      0
  Operating income (loss)                       (258,179)                       0                      0
  Other mining income                             213,491                       0                      0
  Operating income (loss)                        (44,688)                 (4,268)             (41,310)
  Total assets                                 26,031,841               1,135,500              419,460
  Capital expenditures                          2,269,928                       0                      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 on Accounting and Financial Disclosure

None during this fiscal period.

                                                                      PART III

Item 10.  Directors and Executive Officers of the Registrant

The  information  called  for by  Item  10 is  incorporated  by  reference  from
information  under  the  caption  "Election  of a  Director"  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.  The  information  on  Executive
Officers is contained in Part I of this Form 10-K.

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 caption "Voting  Securities" and "Principal  Shareholders
and Ownership by Management" 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.

Compliance with Section 16(a) of the Securities Exchange Act of 1934.

Section 16(a) of the Securities  Exchange Act of 1934 and related Securities and
Exchange Commission rules require the Company's executive officers and directors
and persons  beneficially  owning  greater  than ten percent of the  outstanding
shares to file  reports of ownership  and changes in ownership of the  Company's
shares with the  Securities  and  Exchange  Commission  and to disclose any late
filings.  Based solely on a review of the copies of such forms  furnished to the
Company or  representations  that no Form 5 was required,  the Company  believes
that all Section 16(a) filing requirements were complied with as required.

Item 13.  Certain Relationships and Related Transactions

The information  called for by Item 13 is incorporated by reference in Note 7 of
the  financial  statements  and 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.



<PAGE>


                                                                       PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)  Financial Statements and Schedules

See index to Consolidated  Financial Statements and Supplementary Data in Item 8
of this report.
<TABLE>
<CAPTION>

<S>                                                                                                           <C>
Report of Independent Accountant on the Financial Statement Schedules..........................................74

Schedule IV (1) Indebtedness of Related Parties................................................................75

Schedule IV (2) Indebtedness to Related Parties................................................................77
</TABLE>

(b)  Reports on Form 8-K

None.

(c)  Exhibits

The exhibit numbers in the following list correspond to the numbers  assigned to
such  exhibits in Item 601 of  Regulation  S-K. 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 Exhibits
       4          Instruments defining the rights of security holders,

including indentures.

       4.1         Four-Year  Stock Option  Agreement dated December 14, 1996 to
                   purchase   83,900   common   shares  at  $3.00   per   share.
                   (Incorporated  by reference to Exhibit 4.10 of the  Company's
                   Form 10-K for the year ended March 31, 1997.)

       4.2         Four-Year  Stock Option  Agreement  dated January 10, 1997 to
                   purchase   68,000   common   shares  at  $3.00   per   share.
                   (Incorporated  by reference to Exhibit 4.13 of the  Company's
                   Form 10-K for the year ended March 31, 1997.)

       4.3         Five-Year Stock Option Agreement is to be issued effective as
                   of January 23, 1997, to purchase  200,000 shares at a cost of
                   $4.25 per share.  (Incorporated  by reference to Exhibit 4.15
                   of the  Company's  Form  10-K for the year  ended  March  31,
                   1997.)

       4.4         Three-Year  Stock Option  Agreement dated October 10, 1998 to
                   purchase   10,000   common   shares   at  $.75   per   share.
                   (Incorporated  by reference to Exhibit 4.10 of the  Company's
                   Form 10-K for the year ended March 31, 1999.)

       4.5         Three-Year  Stock Option  Agreement dated October 20, 1998 to
                   purchase   10,000   common   shares   at  $.75   per   share.
                   (Incorporated  by reference to Exhibit 4.11 of the  Company's
                   Form 10-K for the year ended March 31, 1999.)

       4.6         Three-Year  Stock Option  Agreement dated October 22, 1998 to
                   purchase   20,000   common   shares   at  $.75   per   share.
                   (Incorporated  by reference to Exhibit 4.12 of the  Company's
                   Form 10-K for the year ended March 31, 1999.)

       4.7         Three-Year  Stock Option  Agreement dated October 22, 1998 to
                   purchase   30,000   common   shares   at  $.75   per   share.
                   (Incorporated  by reference to Exhibit 4.13 of the  Company's
                   Form 10-K for the year ended March 31, 1999.)

       4.8         Two-Year  Stock  Option  Agreement  dated  July  12,  1999 to
                   purchase   500,000   common   shares  at  $0.50  per   share.
                   (Incorporated  by reference to Exhibit 4.13 of the  Company's
                   Form 10-K for the year ended March 31, 2000.)

      4.9*         Three-Year  Stock  Option  Agreement  dated March 13, 2001
 to purchase  100,000  common
                   shares at $.10 per share.

      4.10*        Three-Year  Stock  Option  Agreement  dated March 13, 2001
 to  purchase  50,000  common
                   shares at $.15 per share.

        9          Voting Trust Agreement--not applicable.




   Exhibit No.                                     Description of Exhibit

       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.)

      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.)


   Exhibit No.                                     Description of Exhibit

      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        Agreement  by and between the Company and  Interactive
Business  Channel,  Inc.  dated
                   January 27, 1999.  (Incorporated  by reference to Exhibit A
of the  Company's  Form 8-K
                   dated February 8, 1999.)

      10.16        May 25, 1999 Amendment to Exhibit 10.15 of the Company's Form
                   10-K for the year  ended  March 31,  1999.  (Incorporated  by
                   reference to Exhibit 10.16 of the Company's Form 10-K for the
                   year ended March 31, 1999.)

     10.17*        Contract for Sale of Real Estate dated August 14, 2000 by
 and between the Company,  its
                   subsdiary, and a related company.

       11*         Schedule of Computation of Net Income Per Share

       13          Annual Report to security holders, Form 10-Q or Quarterly
Report to security holders:

                   Annual  Report  for the period  ended  March 31,  2001,  will
                   include the Form 10-K and will be  submitted  within 120 days
                   after the fiscal year end.

       21*         Subsidiaries and Joint Venture of the Company

      23.1*        Consent of Independent Certified Public Accountant

      99.0         Additional Exhibits

      99.1*        Confirmation agreement, General Lumber & Supply Co., Inc.,
 May 14, 2001.

      99.2*        Confirmation Agreement, Edward L. Machulak, May 14, 2001.

      99.3*        Confirmation Agreement,  Edward L. Machulak Rollover
Individual Retirement Account, May
                   14, 2001.

      99.4*        Confirmation  Agreement,  Sylvia Machulak Rollover Individual
  Retirement Account,  May
                   14, 2001.

   Exhibit No.                                     Description of Exhibit

      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         Other  Material   Information:   Restatement  of  prior
 period  financial  statements.
                   (Incorporated  by  reference  to Item 8 of the  Company's
 Form 10-K for the year ended
                   March 31, 1998.)

      99.7         S.E.C.  Form S-8  Registration  Statement No. 333-59209 filed
                   under the  Securities  Act of 1933, as amended,  and declared
                   effective  July 16,  1998,  registering  one  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 July 16,  1998.) All of these  shares have been
                   issued as of March 31, 2000.

      99.8         S.E.C. Form S-8 Registration  Statement No. 333-95397 filed
 under the Securities Act of
                   1933 as amended and declared  effective  January 26, 2000,
registering  one 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 January 26
 2000.)

      99.9         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, 2001
    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 Annual Report to be signed on its
behalf by the undersigned, thereunto duly authorized on May 16, 2001.

                                                          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 16, 2001
----------------------                                                                          ------------
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,  Executive        May 16, 2001
----------------------                                                                          ------------
Edward A. Machulak                Vice President and Secretary

/s/ Sidney Sodos                  Director and Member of Audit Committee                        May 16, 2001
----------------                                                                                ------------
Sidney Sodos

/s/ Clayton H. Tebo               Director and Member of Audit Committee                        May 16, 2001
-------------------                                                                             ------------
Clayton H. Tebo

</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, 2001, 2000, 1999, 1998 and 1997, 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 14(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.

Bruce Michael Redlin, CPA, LLC
Certified Public Accountant



Milwaukee, Wisconsin
May 9, 2001





<PAGE>

<TABLE>
<CAPTION>

                                                      COMMERCE GROUP CORP. AND CONSOLIDATED SUBSIDIARIES

                                                                        SCHEDULE IV (1)
                                                         INDEBTEDNESS OF RELATED PARTIES - NON CURRENT
                                                          YEARS ENDED MARCH 31, 2001, 2000, AND 1999


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

<S>                                       <C>              <C>                         <C>          <C>
Year ended March 31, 2001
Joint Venture                           $27,936,503       $5,172,898                   $0           $33,109,401

Year ended March 31, 2000
Joint Venture                           $23,744,254       $4,192,249                   $0           $27,936,503

Year ended March 31, 1999
Joint Venture                           $20,090,773       $3,653,481                   $0           $23,744,254

</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  construction  and  erection of the cone  crushing  system is
        taking place. Also included are the holding costs.
<TABLE>
<CAPTION>

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

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

<S>                                       <C>            <C>                          <C>           <C>
Year ended March 31, 2001
SSGM                                     $26,368,951      $3,136,933                   $0           $29,505,884

Year ended March 31, 2000
SSGM                                     $23,823,518      $2,545,433                   $0           $26,368,951

Year ended March 31, 1999
SSGM                                     $21,524,975      $2,298,543                   $0           $23,823,518

</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 the outstanding indebtedness.



<PAGE>


                                         This Page Left Blank Intentionally.


<PAGE>
<TABLE>
<CAPTION>



                                       COMMERCE GROUP CORP. AND CONSOLIDATED SUBSIDIARIES

                                                                        SCHEDULE IV(2)
                                                                INDEBTEDNESS TO RELATED PARTIES
                                                      CURRENT YEARS ENDED MARCH 31, 2001, 2000, AND 1999

                                              Balance at        Additions to       Deletions to
                                             Beginning of       Indebtedness      Indebtedness           Balance at
Identity of Debtor                              Period              (1)                   (2)           End of Period
-------------------                             ------              ---                   ---           -------------

<S>                                               <C>            <C>              <C>                     <C>
Year ended March 31, 2001
President of the Company                        $3,072,268       $   604,235(a)   $                0        $3,676,503
President's RIRA                                   646,141           103,627(b)         (150,000)(a)           599,768
President's Affiliated Company                   1,808,514           366,741(c)       (1,249,050)(b)           926,205
President's Wife's RIRA                            384,290            61,169(d)         (133,000)(c)           312,459
President's Son/Daughter-in-Law                     81,420                                                      95,445
                                            ------- ------        ------            ----------------   -------  ------
                                                             14,025(d)            0
                                                             ----------           -
 Total, notes payable                           $5,992,633        $1,149,797      $ (1,532,050)             $5,610,380
                                                ==========        ============    =============             ==========

President's Accrued Salary                      $1,839,015       $   440,000(e)   $                0        $2,279,015
                                                ==========       ===========      ==================        ==========

President's Wife's Consulting Fees          $                   $    219,600(f)   $                0       $   219,600
                                            ===============     ============      ==================       ===========
                                                         0

Legal fees (President's son is a
principal)                                     $   260,926      $     47,360(g)   $                0       $   308,286
                                               ===========      ============      ==================       ===========

Year ended March 31, 2000
President of the Company                        $2,568,600          $503,668(a)   $                0        $3,072,268
President's RIRA                                   550,951            95,190(b)                                646,141
                                                                                  0
President's Affiliated Company                   1,493,026           315,488(c)                              1,808,514
                                                                                  0

Others                                             397,102            68,608(d)                                465,710
                                            -----  -------   ----     ------      ------------------   -----   -------
                                                                                  0
 Total, notes payable                           $5,009,679          $982,954      $                0        $5,992,633
                                                ==========          =========     ==================        ==========

President's Accrued Salary                      $1,674,015        $  165,000(e)   $                0        $1,839,015
                                                ==========        ==========      ==================        ==========

Legal fees (President's son is a
principal)                                     $   197,139       $    63,787(g)   $                0       $   260,926
                                               ===========       ===========      ==================       ===========

Year ended March 31, 1999
President of the Company                        $2,219,984          $348,616(a)   $               0         $2,568,600
President's RIRA                                   469,987            80,964(b)                    0           550,951
President's Affiliated Company                   1,182,709           310,317(c)                    0         1,493,026
Others                                             302,440            94,662(d)                    0           397,102
                                            -----  -------   ---      ------      ------------------   -----   -------
 Total, notes payable                           $4,175,120                        $               0         $5,009,679
                                                ==========                        =================         ==========
                                                             $834,559

President's Accrued Salary                      $1,509,015         $ 165,000(e)   $               0         $1,674,015
                                                ==========         =========      =================         ==========

Legal fees (President's son is a
principal)                                     $   175,082          $             $               0        $   197,139
                                               ===========          ===           =================        ===========
                                                             22,057(f)
</TABLE>

(1)(a)(b)The 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:

         On January 10, 1997,  four-year stock options to purchase 68,000 of the
         Company's  restricted common shares at a price of $3.00 a share.  These
         options  expired on January 9, 2001,  as the holder of the  options did
         not execute its rights; and

         On July 12, 1999,  two-year  stock  options to purchase  500,000 of the
Company's restricted common shares at a price of $0.50 a share.

(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  for vacation  pay from April 1, 1981 through  March 31,
         2001 (20 years at $13,750 or $278,000), for a total of $440,000.

(1)(f)   The  Directors,  pursuant to a resolution  adopted on October 20, 2000,
         recognized that there was due to the President's wife,  consulting fees
         from October 1, 1994, through March 31, 2001,  computed as follows:  72
         months at $2,800 per month  ($201,600),  and from October 1, 2000,  six
         months at $3,000 per month ($18,000), for a combined total of $219,600.

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

(2)      Deletions to Indebtedness are reflected as a net to the additions.

(2)(a)   Pursuant to a Directors'  resolution  adopted on August 14, 2000,
the President's  RIRA, for need of liquidity,  purchased on 600,000 of the
 Company's
         restricted common shares at a unit price of $.25 each, for a total of
$150,000.

(2)(b)   Pursuant to a Directors'  resolution  adopted on August 14,  2000,  the
         Standing  Rock  Campground  (SRC),  which  was  encumbered  and held as
         collateral  by the  President's  affiliated  company,  was  sold to the
         affiliate  company  for  the  sum of  $1,249,050.  The  agreement  also
         contains the  following  conditions:  if SRC were sold by the affiliate
         company to an  unrelated  third party during a period of one year for a
         sum exceeding the affiliate  company's  purchase price, the difference,
         after  taking into  account all selling  expenses,  would be applied to
         reduce the balance of the affiliate  company's  promissory note. In the
         event  the  selling  price  to a third  party  would  be less  than the
         affiliate  company's  purchase price, then an addition would be made to
         the existing balance of the affiliate company's  promissory note. Also,
         adjustments would be made for the interest due to the affiliate company
         during this period of time.

(2)(c)   Pursuant to a  Directors'  resolution  adopted on August 14,  2000,  in
         order to reduce  corporate debt, the Directors  authorized the Officers
         of  the  Company  to  sell  to the  President's  wife's  RIRA,  certain
         non-income  producing  encumbered  assets  such as 43  parcels  of land
         located in the San Luis North  Estates  Subdivision,  Costilla  County,
         Colorado,  and 12 lots located in Fort Garland,  Colorado,  for a total
         sum of $70,500.  Also,  the  Directors  authorized  the Officers of the
         Company to sell to the RIRA 250,000 of the Company's  restricted common
         shares  at  $.25  each,  for  a  total  of  $62,500.   Combined,   both
         transactions totalled $133,000.