2

                                                       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, 2003

                                              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      Over The Counter Bulletin Board (OTC BB)


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

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

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

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

The aggregate market value of the 14,599,635 shares held by nonaffiliates of the
registrant  based  on the  closing  price  of the  OTC BB on May 12,  2003,  was
approximately $3,503,912.

Common shares outstanding as of March 31, 2003, were 20,407,429.

DOCUMENTS INCORPORATED BY REFERENCE

Part III  incorporated  by  reference  from the  registrant's  definitive  Proxy
Statement  for its  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.


<PAGE>
<TABLE>
<CAPTION>

                                               COMMERCE GROUP CORP.
                                           2003 FORM 10-K ANNUAL REPORT
                                     For the Fiscal Year Ended March 31, 2003

                                                 TABLE OF CONTENTS

                                                                                                                 Page


                                                      PART I

Item 1.
<S>                                                                                                    <C>
Business.............................................................................................  3
Item 2.
Properties...........................................................................................14
Item 3.       Legal
Proceedings....................................................................................       23
Item 4.       Submission of Matters to a Vote of Security
Holders..................................................                                             23
Item 4(a).    Executive Officers and Managers of the
Company.......................................................                                        24

                                                      PART II

Item 5.       Market for the Company's Common Stock and Related Stockholders'
Matters..............................                                                                 26
Item 6.       Selected Financial
Data............................................................................                    ..28
Item 7.       Management's Discussion and Analysis of Financial Condition
              and Results of
Operations...........................................................................                 29
Item 7(a).    Quantitative and Qualitative Disclosures About Market
Risk...........................................                                                       40
Item 8.       Financial Statements and Supplementary
Data..........................................................                                        42
Item 9.       Changes in and Disagreements on Accounting and Financial
Disclosure.................................                                                          .66

                                                     PART III

Item 10.      Directors and Executive Officers of the
Registrant...................................................                                         66
Item 11.      Executive
Compensation...............................................................................           66
Item 12.      Security Ownership of Certain Beneficial Owners and
Management.......................................                                                     66
Item 13.      Certain Relationships and Related
Transactions.......................................................                                    66

                                                      PART IV

Item 14.      Controls and
Procedures..............................................................................                 67
Item 15.      Exhibits, Financial Statement Schedules and Reports on Form
8-K......................................                                                                68
              Sarbanes-Oxley Section 302
Certifications............................................................                               74
</TABLE>

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

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



<PAGE>


                                                      PART I


Item 1.  Business

General

Commerce Group Corp. ("Commerce," the "Company," and/or the "Registrant") is the
only precious  metals company that has produced gold in the past twenty years in
the Republic of El Salvador, Central America. Furthermore,  since 1968, Commerce
has been operative in the exploration, exploitation, development, and production
of precious  metals in El  Salvador.  Its gold ore  reserves  exceed 1.5 million
ounces,  which, in turn, translates to .074 ounces of gold for each common share
issued and outstanding.  Commerce's objectives are to obtain a sufficient amount
of funds to expand its San Cristobal Mill and Plant and to commence an open-pit,
heap-leach  operation  to  produce  gold at a  profit.  Commerce  simultaneously
continues to seek a compatible  acquisition or merger,  preferably a business in
the precious metals field, or an endeavor in which synergism will prevail.  This
combination should enhance the value of Commerce's common shares.

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

Precious Metal Mining

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

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

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



Operations

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

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

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

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

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

As of March 31,  2003,  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 $81,947,663.

SSGM Joint Venture Arrangements

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

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

The Joint  Venture  leases  the SSGM from the  Company's  52%-owned  subsidiary,
Mineral San Sebastian,  S.A. de C.V. ("Misanse"),  an El Salvadoran corporation.
On January 14, 2003,  the Company  entered  into an amended and renewed  30-year
lease agreement with Mineral San Sebastian  Sociedad Anomina de Capital Variable
(Misanse)  pursuant  to the  approval of the  Misanse  shareholders  and Misanse
directors  at a meeting  held on January 12,  2003.  The renewed  lease is for a
period of thirty (30) years commencing on the date that the Company receives its
Renewed San Sebastian  Gold Mine  Exploitation  Concession/License,  hereinafter
identified as the "Renewed SSGM," from the Ministry of Economy's  Director of El
Salvador  Department of Hydrocarbons and Mines (DHM). The lease is automatically
extendible  for one or more equal  periods.  The Company will pay to Misanse for
the rental of this real  estate the sum of five  percent of the net sales of the
gold and silver produced from this real estate, however, the payment will not be
less than  $343.00  per month.  The  Company  has the right to assign this lease
without  prior  notice or  permission  from  Misanse.  This  lease is pledged as
collateral for loans made to related parties (Note 7).

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

Organizational Structure

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

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

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

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

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

World Gold Market Price, Customers and Competition

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

At this time the Joint  Venture  believes  that,  due to its  current  financial
capacity,  it may not be a major  gold  producer  based  on the  size of  larger
existing gold mining  companies.  The Company believes no single  gold-producing
company 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 accessibility to
the mine, its infrastructure, and its projected low cost of production may allow
it to compete effectively and to produce reasonable profits.



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

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

Seasonality

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

Environmental Matters

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

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

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








El Salvador, Central America Information Sources

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

1.       The latest El Salvador  Country  Commercial  Guide can be obtained
through the Internet from the following
         website:  http://www.usinfo.org.sv.

2.       General   information   can  also  be  obtained   through  the
  Internet  from  the   following   website:
         http://www.dirla.com/elsalvador2.html.

3.       The U.S.  Embassy in El Salvador  can also be  contacted at  Boulevard
  Santa  Elena,  Urbanizacion  Santa
         Elena,  Antiguo  Cuscatlan,  La  Libertad,  El  Salvador,  telephone
(011)  503-278-4444  and  fax  (011)
         503-278-6011.

4.       Background  Notes on El Salvador can also be obtained from the U.S.
Department of State's database at the
         following website:  http://www.state.gov.

Excerpts  from the website  mentioned in number 2 above,  provide the  following
information about El Salvador, Central America:

"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. . .
..

"A high volcanic mountain range serves as El Salvador's  rugged backbone,  along
which many of the most  important  urban centers are located.  The slopes of the
country's many volcanoes became the first agricultural  centers due to the rich,
volcanic  soils.  These  agricultural  centers,  Santa Ana,  San  Salvador,  San
Vicente,  etc.  have become the  country's  major cities and towns today,  which
share the names of their corresponding volcanoes.

"While the country  coastal areas and lowlands are  typically  hot, San Salvador
enjoys  an  average,  almost  unvarying,  temperature  of 82  degrees  ferenheit
[Fahrenheit],  28 degrees Celsius. The rainy season last[s] from May to October.
The best months for traveling are usually November through January.

"El Salvador,  the smallest Central American  nation,  is bordered to the west
by Guatemala,  to the north and east
by Honduras  [and] to the south by the Pacific  ocean.  Its Pacific  coastline
 is 320 km long.  Aside from Belize,
El Salvador is the only Central American nation that does not have both Pacific
 and Caribbean ports. . . .

"The government of El Salvador is divided into Executive,  Legislative  branches
and the Supreme Court.  The president is freely elected to a five year term. The
Legislative branch,  called the `National Assembly',  is comprised of 60 members
who serve three year terms,  and the 13 member Supreme Court is appointed by the
National Assembly.

"The country is divided into 14 districts, called `departments'. Major political
parties  include the  right-wing  ARENA party,  the  left-wing  Farabundo  Marti
National Liberation Front (FMLN), the Christian Democratic Convergence Party and
the National Conciliation Party."

Operations, Other Than Mining

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

Land Acquisition, Development, Ownership and Real Estate Sales

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

Misanse, the Company's majority-owned subsidiary (52%) owns the SSGM real estate
consisting  of   approximately   1,470  acres.   This  real  estate  is  located
approximately  two and  one-half  miles  northwest  of the city of Santa Rosa de
Lima, off of the Pan American Highway (a four-lane newly  constructed  highway),
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,  on January 14, 2003,  entered  into a 30-year  lease
arrangement.

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

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

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

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

Internet Business and Advertising

The  Company  owns 100% of the  outstanding  common  stock of Ecomm  Group  Inc.
("Ecomm"),  a Wisconsin  corporation.  The Company,  in order to  diversify  its
business  activities,  on  January  29,  1999,  announced  its plans to have its
wholly-owned  subsidiary,  Ecomm,  enter into the web portal  business.  Ecomm's
strategy  is to  attempt  to  acquire  or to "roll  up"  Internet  websites  and
businesses  and  consolidate  them into a web portal.  Since then, the Company's
attempts to acquire Internet-related businesses have not been successful.

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  believed that its SSGM concession was effective from the
time it was issued in July 1987. This  concession  provided 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.

On February 28, 2003 (received March 3, 2003) the DHM admitted to the receipt of
the application and the Company  proceeded to file public notices as required by
Article 40 of the El Salvadoran  Mining Law and its Reform (MLIR).  On April 16,
2003,  the Company's El Salvadoran  legal counsel filed with the DHM notice that
it believed that it complied with the requirements of Article 40, and that there
were no  objections;  and requested that the DHM make its inspection as required
by MLIR Article 42. Once issued, this Renewed SSGM will be pledged as collateral
to the same parties that held the previous concession as collateral.

On  February  24,  2003,  the DHM issued the New SSGM for a period of four years
starting from the date following the  notification of this resolution  which was
received  on  March 3,  2003.  The New SSGM  may be  extended  for two  two-year
periods,  or for a total of eight years.  Besides the San  Sebastian  Gold Mine,
three other formerly  operative gold and silver mines known as the La Lola Mine,
the Santa Lucia Mine, and the Tabanco Mine are included in the New SSGM.

On or about October 20, 2002, the Company filed an application  with the DHM for
the Nueva Esparta Exploration  Concession/License  hereinafter identified as the
"Nueva  Esparta," which consists of 45 square  kilometers  north and adjacent to
the New SSGM. This application is in the process of being considered.

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

Significant Customers

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

Miscellaneous

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

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



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

Financial Information About Industry Segments Lines of Business

Operation

Campground:  For the years ended March 31, 2001,  revenues  have been  generated
from the  campground  business.  Although  Homespan  owned the  campground  real
estate, the Company was the operator of the Standing Rock Campground (SRC) until
March 31, 2001. The SRC was sold during the fiscal period ended March 31, 2001.

Land Sales

There were none as the Company and its  subsidiaries  have sold their  remaining
lots in Colorado during the fiscal year ended March 31, 2001.

Mining

The Company's  primary strategy,  through its Joint Venture,  is to use its SCMP
facilities to process gold ore transported from SSGM and from 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 which time the Joint  Venture  announced  the  suspension  of its SCMP
facilities  in order to  overhaul,  repair,  retrofit  and expand  the SCMP.  In
addition to producing gold at the SCMP, when funds become available, the Company
intends to process its SSGM gold via an open-pit, heap-leaching system.

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.  However,  the  Company  recognizes  that it may be more
difficult  to  obtain  financing  from  the  sale  of its  common  shares  under
reasonable  terms and conditions  due to a substantial  decline in the Company's
common share price.  This circumstance may change as the price of gold has begun
to increase from January 2002, and worldwide  investors have been  significantly
more interested in the ownership of gold.

Internet Business

As of March 31,  2003,  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, 2003,  the Joint  Venture  employed  between 34 and 40 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.  Also,  the Company  employs up to four persons,  including
part-time help, in the United States.  Since the Joint Venture has laid off most
of  its  employees,  the  Joint  Venture  had to pay  the  severance  pay to its
employees  and  therefore  it had to sell and  continues  to sell the  Company's
common  shares which were issued to the Commerce  Group Corp.  Employee  Benefit
Account.  El Salvador  employees are entitled to benefits,  including  severance
pay, which is based on one month's pay for each year of employment.






























<TABLE>
<CAPTION>








                                                 Industry Segments


1.     Unaffiliated Sales                                                           Year Ended March 31,

        Industry                Location                                  2003                2002                   2001
        --------                --------                                  ----                ----                   ----

<S>                             <C>                                         <C>              <C>             <C>
        Mining                  El Salvador                                  $   $               0      $               0
                                                                             0
        Campground              Missouri, USA                                $   $               0           $    238,520
                                                                             0

2.     There Were No Intersegment Sales

3.     Total Revenues                                                           Year Ended March 31,

        Industry                Location                                  2003                2002                    2001
        --------                --------                                  ----                ----                    ----

        Mining                  El Salvador                                  $                   $      $                0
                                                                             0                   0
        Campground              Missouri, USA                                0                   0                 238,520
        Other                   Delaware/Wis., USA                                                                   3,662
                                                              ------------------ ----------------    -----------     -----
                                                                             0                  38
                                                                             -                  --
                                Total:                                       $   $              38           $     242,182
                                                                             0

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

        Industry                Location                                   2003               2002                    2001
        --------                --------                                   ----               ----                    ----

        Mining                  El Salvador                                   $                  $      $                0
                                                                              0                  0
        Campground              Missouri, USA                                 0                  0                 185,391
        Other Income            Wisconsin, USA                                0                 38                   3,662
        Corp. Hdqtrs.           Wisconsin, USA                         (35,886)           (43,209)                (59,263)
                                                              ------   --------   ------  --------   ------       --------
                                Total:                            $    (35,886)      $    (43,171)           $     129,790

5.     Identifiable Assets                                                      Year Ended March 31,

        Industry                Location                                   2003                2002                   2001
        --------                --------                                   ----                ----                   ----

        Mining                  El Salvador                         $33,029,999         $31,677,285            $30,046,855
        Campground              Missouri, USA                                 0                   0                      0
        Real Estate             Colorado, USA                                 0                   0                      0
        Corporate Assets                                                221,675             268,149                255,830
                                                              -------   -------   -------   -------   -------      -------
                                Total:                              $33,251,674         $31,945,434            $30,302,685




</TABLE>
<PAGE>



Item 2.  Properties



Mining Properties

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

                                                              Date                              Amount of Funds to Make   Date Mine
          Property Description    Nature of Interest           Interest        Cost of Interest      Property Operational   will be
          --------------------    ------------------                           ----------------      ------------------- Operational
                                                           was Acquired
                                                                       ------------
<C>                                  <C>                                   <C>       <C>

1.   San   Sebastian    Gold   Mine  Mineral concession      1968     5% of the gross  precious  This is  dependent on the  (1)
     located   two   and   one-half  consisting of   100%             metal  proceeds or $343 a  scale    of    production
     miles  northwest  of the  city ownership   of  the                month     whichever    is  that  management  decides
     of Santa  Rosa de Lima and the  precious  metals                  higher.                    to  perform.  The  amount
     Pan American Highway.           extracted from this mine.                                   0f  investment  could  be
                                                                                               from $5  million  to $100
                                                                                                  million.

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

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

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

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

6.   San  Cristobal  Mill and Plant  Mill  and  Plant  owned by Joint  Equipment Equipment  purchased  and  to expand  the plant,(3)
     located  off the Pan  American  Venture.   The  real  estate  is   02/23/93 extensive    retrofitting including    a   crushing
     Highway  west  of the  city of  owned  by  an   agency   of  the     and    was and  continues  to be system to a  capacity  of
     El Divisadero.                  Government of El Salvador.        thereafter performed.        Through 500  tons  per  day;  an
                                                                   Lease    03/31/03,   a  total of   estimated  sum  of up to
                                                                        11/12/93  $6,533,055    has    been  $3    million    may be
                                                                                invested  in  this  plant  required, all dependent
                                                                                   and            equipment.  whether   new  or used
                                                                                 Depreciated    value   is  equipment     will   be
                                                                                  $4,280,922.                purchased.

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

(1) It  was  in   operation   on  a curbed  production  basis  from 03/31/95
  until  December  31,1999   when   operations   were suspended  due to the
 need  to overhaul,  repair,  restore and expand the SCMP facilities.
(2)  Undtermined.
(3) Curbed   production   commenced March 1995;  expansion  program
in     progress.     Operations suspended  on  12/31/99   until
the   existing   equipment   is overhauled,  repaired, restored
and   expansion   of  the  SCMP facilities are completed,  and,
dependent on the price of gold.

</TABLE>

<PAGE>






                                                                          15

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

SSGM Reserves and Operation

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

(1)      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 until the price of
gold is at a level to process it  profitably.  The stope fill that is  available
was  in the  past  considered  to be  too  low  of a  grade  of  ore to  process
economically,  therefore  it  was  primarily  used  to  fill  the  voids  in the
underground  workings to accommodate  the extraction of the higher grade of gold
ore in the past SSGM mining activities.  Virgin gold ore, as the term is used in
this  report,  is gold ore which is on the  surface and  readily  available  for
processing; it also includes the undeveloped underground gold ore.




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

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

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

Misanse Mining Lease

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

SSGM Mining Lease

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

Misanse Mineral Concession/License-Government of El Salvador

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

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

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

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

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

On  September  6, 2002,  at a meeting  held with the El  Salvadoran  Minister of
Economy and the DHM, it was agreed to submit an application for the Renewed SSGM
for a 30-year term and to simultaneously  cancel the concession obtained on July
23, 1987. On September 26, 2002, the Company filed this application. On February
28,  2003  (received  March 3,  2003) the DHM  admitted  to the  receipt  of the
application  and the Company  proceeded  to file  public  notices as required by
Article 40 of the El Salvadoran  Mining Law and its Reform (MLIR).  On April 16,
2003,  the Company's El Salvadoran  legal counsel filed with the DHM notice that
it believed that it complied with the requirements of Article 40, and that there
were no  objections;  and requested that the DHM make its inspection as required
by MLIR Article 42. Once issued, this Renewed SSGM will be pledged as collateral
to the same parties that held the previous concession as collateral.

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

On October 20, 2002, the Company applied for the New SSGM,  which covers an area
of 42 square kilometers and includes  approximately  1.2306 square kilometers of
the Renewed SSGM. The New SSGM is in the  jurisdiction of the City of Santa Rosa
de Lima in the Department of La Union and in the Nueva Esparta in the Department
of Morazan, Republic of El Salvador,  Central America. On February 24, 2003, the
DHM  issued  the New SSGM  for a period  of four  years  starting  from the date
following the  notification  of this  resolution  which was received on March 3,
2003. The New SSGM may be extended for two two-year  periods,  or for a total of
eight years. Besides the San Sebastian Gold Mine, three other formerly operative
gold and silver mines known as the La Lola Mine,  the Santa Lucia Mine,  and the
Tabanco Mine are included in the New SSGM.





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

On or about October 20, 2002, the Company filed an application  with the DHM for
the Nueva Esparta,  which consists of 45 square kilometers north and adjacent to
the New SSGM. This rectangular area is in the Departments of La Union (east) and
Morazan  (west) and in the  jurisdiction  of the City of Santa Rosa de Lima,  El
Salvador,  Central  America.  Included  in the Nueva  Esparta  are  eight  other
formerly operated gold and silver mines known as: the Grande Mine, the Las Pinas
Mine, the Oro Mine,  the Montemayor  Mine, the Banadero Mine, the Carrizal Mine,
the La Joya Mine and the Copetillo Mine. The application is pending.

SSGM Current Status

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

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

Proposed SSGM Open-Pit, Heap-Leaching Operation

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

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


SSGM Ownership of the Property

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

Environmental Matters

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

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

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

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







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

Potosi Location

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

Potosi Lease Agreement

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

Hormiguero Mine ("Hormiguero")

Hormiguero Location

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

Hormiguero Current Status

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

Modesto Mine

Modesto Mine Location

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









Modesto Mine Present Status

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

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

Montemayor Mine ("Montemayor")

Montemayor Location/Ownership

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

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

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

SCMP Location

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

SCMP Lease Agreement

Although the Joint Venture owns the mill, plant and related  equipment,  it does
not own the land and certain buildings.  On November 12, 1993, the Joint Venture
entered into an agreement with 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 near the SCMP.

SCMP Mill and Plant Process Description

Current Status

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

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

SCMP Project Operating Plan

Current and Anticipated Production Schedule

Preproduction  development,  consisting  primarily  of  expansive  road and site
improvements to the mine and mill sites,  mill equipment  modifications  and the
development  and  hauling of virgin ore has taken  place  during the past years.
Initial  production  was from the SSGM  tailings.  Since  the  SSGM's  tailings'
resource is 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 decline to a level of unprofitability.

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

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

Environmental Matters

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

The Joint Venture Laboratories (Lab)

The Joint Venture has two  laboratories:  one located at the SCMP facilities and
the other on real  estate  owned by the Company  near the SSGM site.  A total of
78,441  samples of  exploration  fire assays have been logged  through March 31,
2003.  This total does not include the assays that were performed for production
purposes.

Corporate Headquarters

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

Item 3.  Legal Proceedings

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

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

No matters were brought to a vote of security  holders in the last quarter ended
March 31, 2003.













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

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

<TABLE>
<CAPTION>
                                 Age as of            Executive Offices Held             Period Served
           Name                March 31, 2003            With Company (1)                In Office (2)
           -----               --------------            ----------------                -------------
<S>                                  <C>
Edward L. Machulak                   76          President, Chief Executive,
                                                 Operating and Financial Officer
                                                 Treasurer                          9/14/62 to present
                                                                                    06/78  to present
Edward A. Machulak                   51          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                        61          Project and Mine Manager           10/86 to 1995
                                                 Manager of El Salvador
                                                 Operations                         03/95 to present
</TABLE>

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

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

Family Relationships

Edward A. Machulak,  presently a Director,  Member of the  Directors'  Executive
Committee,  Director-Emeritus,  Executive Vice President,  and Secretary, is the
son of Edward L. Machulak,  the Company's Chairman of the Board of Directors who
is also a Member of the Directors' Executive Committee, and is the President and
Treasurer of the Company.  Attorney John E. Machulak (son of Edward L. Machulak)
of the law firm of Machulak,  Robertson & 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, and has been a  Director-Emeritus  since December 5,
1979.







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

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

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

His  business  experience  is as follows:  Director and  Corporate  Secretary of
General  Lumber & Supply Co.,  Inc., a building  material  wholesale  and retail
distribution  center from April 1, 1970 to November 1983; Director and President
of Gamco,  Inc., a marketing  and  advertising  company,  from  November 1983 to
present; Director and President of Circular Marketing,  Inc., an advertising and
marketing  business,  from March 1986 to  present;  Director  and  President  of
MacPak,  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,  a silver
mining company that formerly operated in El Salvador.














                                                                       PART II


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

(a)  Principal Market and Common Stock Price

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

The  following  table  reflects  the range of high and low  trade  prices of the
common  shares as reported by Nasdaq or the OTCBB for the period ended March 31,
2003 and the highest  and lowest  trade price  during each  quarter  through the
period ended March 31, 2002.
<TABLE>
<CAPTION>

For the period ended                                 March 31, 2003                 March 31, 2002
                                                   High           Low            High             Low
<S>                       <C>                     <C>            <C>            <C>              <C>
First quarter ending June 30                      $0.45          $0.08          $0.16            $0.06
Second quarter ending September 30                $0.29          $0.07          $0.20            $0.08
Third quarter ending December 31                  $0.31          $0.10          $0.11            $0.07
Fourth quarter ending March 31                    $0.42          $0.14          $0.10            $0.06
</TABLE>

(b)  Approximate Number of Holders of Common Shares

As of March 31, 2003, the common shares were held by approximately 4,000
shareholders; it is estimated that over  95% are United States' residents.

As of March 31, 2003,  there were  approximately  1,658 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 2,342.

As of March 31, 2003,  there were issued and  outstanding:  (a) 20,407,429
 shares of common stock;  and (b) 960,000 stock options to purchase  common
stock.

(c)  Equity Compensation Plans

None.

(d)  Dividend History

Subject to the rights of holders of any outstanding  series of preferred  shares
to receive  preferential  dividends,  and to other  applicable  restrictions and
limitations,  holders  of  shares of  common  shares  are  entitled  to  receive
dividends if and when  declared by the Board of Directors  out of funds  legally
available. No dividends were payable during the last fiscal year ended March 31,
2003.  The  declaration  of future  dividends will be determined by the Board of
Directors  in light of the  Company's  earnings,  cash  requirements  and  other
relevant considerations.


(e)  Issue of Securities

During the fourth quarter ended March 31, 2003, the Company issued 66,666 shares
to its  Directors in payment for  Directors'  fees,  22,222 shares for Officer's
compensation;  and 49,333 to a Director for services rendered. These shares were
issued pursuant to a Securities and Exchange Commission Form S-8 Registration.














































Item 6.  Selected Financial Data

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

                               Year Ended March 31
                                        -------------------------------------------------------------------------------------------
                                                  2003            2002           2001           2000             1999
                                                  ----            ----           ----           ----             ----
Income statement data
<S>                                      <C>            <C>            <C>             <C>               <C>
Total revenue                            $              $               $     242,182  $     480,615     $    847,702
                                         ============================== =============  =============     ============
                                                     0              38
                                                     =              ==
Income (loss) from continuing
operations                               $    (35,886)   $    (43,171)  $     129,790   $  (396,232)    $    (90,266)
                                         =============   =============  =============   ============    =============

Income (loss) from continuing operations per share:

  Basic                                  $     (.0019)   $     (.0026)      $          $     (.0326)   $      (.0081)
                                         =============   =============      =========  =============   ==============
                                                                                .0092
  Diluted                                $     (.0018)   $     (.0025)      $          $     (.0282)   $     ( .0070)
                                         =============   =============      =========  =============   ==============
                                                                                .0086
  Weighted average shares - basic           18,907,958      16,349,170     14,174,662     12,172,867       11,165,127
                                         =  ==========  =   ==========  =  ==========  =  ==========  ==   ==========
  Weighted average shares - diluted         19,867,958      17,019,170     15,094,662     14,053,002       12,813,368
                                         =  ==========  =   ==========  =  ==========  =  ==========  ==   ==========
  Cash dividends per common share        $              $               $              $              $
                                         ==============================================================
                                                     0               0              0              0                0
                                                     =               =              =              =                =

Balance sheet data
  Working capital*1                      $     457,538   $     199,573  $     152,906  $     420,963    $     430,833
                                         =============   =============  =============  =============    =============
  Total assets                             $33,251,674     $31,945,434    $30,302,685    $29,856,201      $27,586,801
                                           ===========     ===========    ===========    ===========      ===========
  Short-term obligations*1                 $12,329,096     $11,486,216   $  9,998,955    $10,231,272     $  8,911,087
                                           ===========     ===========   ============    ===========     ============
  Long-term obligations                  $              $               $              $              $
                                         ==============================================================
                                                     0               0              0              0              0
                                                     =               =              =              =              =
  Shareholders' equity                     $20,922,577     $20,459,218    $20,303,730    $19,624,929      $18,675,714
                                           ===========     ===========    ===========    ===========      ===========
</TABLE>

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


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

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

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

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

The following  discussion provides  information on the results of operations for
the three years ended March 31, 2003, 2002 and 2001 and the financial condition,
liquidity  and  capital  resources  for March 31, 2003 and 2002.  The  financial
statements of the Company and the notes  thereto  contain  detailed  information
that should be referred to in conjunction with this discussion.

Accounting Policies and Estimates

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

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

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

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

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

The  financial  statements  for the fiscal years ended March 31, 2003,  2002 and
prior years reflects and includes  Commerce Group Corp.'s  subsidiaries  and the
Commerce  Group  Corp./Sanseb  Joint Venture  (Joint  Venture) on a consolidated
basis.  Previously,  the Company reported the investment in the Joint Venture as
advances to the Joint Venture and the Company's  advances  included the interest
earned on these advances in anticipation of the interest being  reimbursed.  Now
these  advances  are  restated  and  combined  with the  Company's  Consolidated
Financial  Statements.  Although the  elimination of interest income reduces the
retained  earnings,  it does not eliminate the interest charged by and earned by
the Company which is due and payable to it and which is maintained  additionally
with a separate  accounting.  At such time when the profits from the gold mining
operation are  distributed,  the interest  earned on these advances will be paid
first to the Company pursuant to an agreement  entered into by the joint venture
parties.

For the fiscal year ended March 31, 2003,  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

Current Events

In the S.E.C.  Form 10-Q filing for the  nine-month  period  ended  December 31,
2002, the Company reported the status of the concession/license filings with the
El Salvador  Department of  Hydrocarbons  and Mines (DHM).  Since that time, the
following events have taken place:

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

On February 28, 2003 (received March 3, 2003) the DHM admitted to the receipt of
the application and the Company  proceeded to file public notices as required by
Article 40 of the El Salvadoran  Mining Law and its Reform (MLIR).  On April 16,
2003,  the Company's El Salvadoran  legal counsel filed with the DHM notice that
it believed that it complied with the requirements of Article 40, and that there
were no  objections;  and requested that the DHM make its inspection as required
by MLIR Article 42.

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

On  February  24,  2003,  the DHM issued the New SSGM for a period of four years
starting from the date following the  notification of this resolution  which was
received on March 3, 2003.

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

On or about October 20, 2002, the Company filed an application  with the DHM for
 the Nueva Esparta,  which consists of 45 square  kilometers north and
adjacent to the New SSGM.

Gold Ore Reserves (03/31/03)

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

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

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

Precious Metal Mining

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

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

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

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

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

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

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

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

The Internet and Related Businesses

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 to become a recognized web portal on the world wide web by
acquiring  or  "rolling-up"  Internet  websites.  At this time the  Company  has
decided not to pursue further interest in the Internet business.

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

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

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

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

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

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

Results of Operation for the Fiscal Year Ended March  31, 2002 Compared to March
 31, 2001
--------------------------------------------------------------------------------

The  Company  recorded  a net loss of  ($43,171)  or  ($.0026)  per  share on no
revenues in 2002.  This compares to a net income of $129,790 or $.0092 per share
on revenues  of  $238,520  in 2001.  There were no revenues in 2002 as the Joint
Venture   suspended  its  gold  mining  and   processing  due  to  its  need  to
rehabilitate,  overhaul and expand its SCMP.  Also,  the  unusually low price of
gold contributed to the decision of "moth balling" the operations.  The price of
gold has increased since January 2002 because of more worldwide  interest in the
ownership of gold, the declining value of the U.S.
dollar, and the threat of worldwide terrorism.

The Joint Venture on December 31, 1999  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, 2002 or 2001.  Additionally,  even though the Company has
an operating tax loss  carryforward,  the Company has previously  recorded a net
deferred  tax  asset  due  to an  assessment  of  the  "more  likely  than  not"
realization criteria required by the Statement of Financial Accounting Standards
No. 109, Accounting for Taxes.

Inflation did not have a material impact on operations in the fiscal years ended
March 31, 2002 or 2001. The Company  anticipates  that inflation during the next
fiscal year will not have an impact on continuing operations.

Interest  expense in the sum of  $1,026,940  was  recorded by the Joint  Venture
during this fiscal period  compared to  $1,063,469  for the same period in 2001,
and it was eliminated with the interest income earned from the Joint Venture.

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

Financing Activities, Liquidity and Capital Resources

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

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

The Company  estimates that it will need up to U.S. $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  could  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 the
completion  of  erecting  a  crushing  system;  $3,033,548  for  the  processing
equipment and site and  infrastructure  costs;  and a sum of $4,966,452 is to be
used for working  capital.  The once depressed  price of gold has  substantially
increased during this fiscal period.  The Company's  incredibly low common share
market price is a major  deterrent in raising cash for the  Company's  programs.
During this fiscal  year,  the price of gold has been  darkened by  geopolitical
tensions, recession fears, corporate malfeasance and reports of deflation.

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

During the past, the Joint Venture was engaged in exploration,  exploitation and
development  programs designed to increase its gold ore reserves.  The prospects
of expanding the gold reserves are positive.  The Company believes that the past
invested  funds  significantly  contributed  to the value of the SSGM and to the
value of its other mining  prospects as the results of the  exploratory  efforts
evidence the  potential for a  substantial  increase of gold ore  reserves.  The
Company  was  unable to obtain  sufficient  funds  during  this  fiscal  year to
complete  the  modification  and  expansion  of the  SCMP or for  its  open-pit,
heap-leach  operation.  However, the Company did invest a sum of $155,186 during
this fiscal period, which was used to progress the erection of the cone crushing
system.

The Company  continues to rely on its directors,  officers,  related parties and
others for its funding needs. The Company believes that it may be able to obtain
such  short-term  and/or equity funds as are required from similar sources as it
has in the past. It further believes that the funding needed to proceed with the
continued  exploration  of the other  exploration  targets  for the  purpose  of
increasing  its gold ore reserves will be greatly  enhanced if the price of gold
continues  to  increase.   These  exploration  programs  will  involve  airborne
geophysics, stream chemistry,  geological mapping, trenching, drilling, etc. The
Joint Venture  believes that it may be able to joint venture or enter into other
business  arrangements to share these exploration costs with other entities.  On
March 5, 2003, the Company reported on the status of the Renewed SSGM and on the
status of the New SSGM which may increase the  potential and add gold and silver
ore reserves. Elsewhere in this report are detailed explanations of the issuance
of the New SSGM.

From  September 1987 through March 31, 2003, the Company has advanced the sum of
$40,181,015 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 $40,771,280.  This  investment  includes the charge of
$23,751,735 for interest  expense during this period of time. The funds invested
in the Joint Venture were used primarily for the exploration,  exploitation, and
development of the SSGM, for the  construction  of the Joint Venture  laboratory
facilities  on real  estate  owned by the  Company  near the SSGM site,  for the
operation  of the  laboratory,  for the  purchase of a 200-ton per day used SCMP
precious metals' cyanide leaching mill and plant, for the initial  retrofitting,
repair,  modernization  and  expansion of its SCMP  facilities,  for  consumable
inventory,  for working  capital,  for  exploration and holding costs of the San
Felipe-El Potosi Mine, the Modesto Mine, the Hormiguero Mine, and the Montemayor
Mine, for SSGM infrastructure, including rewiring, repairing and installation of
about two miles of the  Company's  electric  power  lines to provide  electrical
service, for the purchase of equipment,  laboratory chemicals, and supplies, for
parts and supply  inventory,  for the maintenance of the  Company-owned  dam and
reservoir, for extensive road extension and preservation,  for its participation
in the construction of a community bridge, for community  telephone building and
facilities,  for a  community  place of  worship,  for the  purchase of the real
estate on the Modesto  Mine,  for leasing the  Montemayor  real estate,  for the
purchase and erection of a cone  crushing  system,  for diamond  drilling at the
SSGM,  for the purchase of a rod mill and a carbon  regeneration  system and all
other related needs.

Employees

As of March 31, 2003,  the Joint  Venture  employed  between 34 and 40 full-time
persons in El Salvador to perform its  limited  exploration,  exploitation,  and
development  programs;  to erect the cone crushing  system,  to provide  24-hour
seven-day-a-week  security at three  different  sites;  to provide  engineering,
geology,   drafting,   and   computer-related   services;   and  to  handle  the
administration  of its  activities.  None of these  employees are covered by any
collective  bargaining  agreements.  It has developed a harmonious  relationship
with its employees,  and it believes that in the past, it was one of the largest
single  non-agricultural  employers in the El Salvador  Eastern Zone.  Also, the
Company  employs up to four  persons,  including  part-time  help, in the United
States.  Since the Joint Venture has laid off most of its  employees,  the Joint
Venture had to pay the  severance  pay and other  benefits to its  employees and
therefore it had to sell and continues to sell the Company's common shares which
were issued to the Commerce Group Corp.  Employee Benefit  Account.  El Salvador
employees are entitled to receive  severance  pay, which is based on one month's
pay for each year of employment.

Related Party Loans, Obligations and Transactions

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

Company Advances to the Joint Venture

Since  September  1987  through  March 31, 2003,  the Company,  and three of its
subsidiaries,  have advanced to the Joint Venture  $40,771,280.  Included in the
total advances is the interest charged to the Joint Venture by the Company which
amounts to $23,751,735  through March 31, 2003. The Company furnishes all of the
funds required by the Joint Venture.  This interest  charge has been  eliminated
from these financial statements.

Efforts to Obtain Capital

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

The Company, Sanseb, and the Joint Venture consider the past political situation
in the Republic of El Salvador to have been unstable, and believe that the final
peace  declaration  on December 16, 1992,  has put an end to the conflict.  Even
though  many years have  passed,  the stigma of the past  unfavorable  political
status in the Republic of El Salvador  exists and  therefore  certain  investors
continue to be apprehensive to invest the funds required.  However, as explained
in this  report,  the Company was able to obtain a sum of funds to invest in the
expansion  and  retrofitting  of its SCMP and for the  exploration  of its other
mining  prospects.  The decline in the price of gold to a 20-year low  depressed
the public interest,  which affected the 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 equity capital.  The
Company  believes that it will be able to obtain  adequate  financing to conduct
its  operations  from the same sources as in the past.  There are no  assurances
that funds will be available, except at this time, there is a greater world-wide
interest in the ownership of gold. The price of gold has increased substantially
during this past fiscal year.

Environmental Regulations

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

The DHM  requires  environmental  permits  to be issued in  connection  with the
application  of the Renewed  SSGM.  The issuance of these  permits are under the
jurisdiction of the El Salvador  Ministry of Environment  and Natural  Resources
Office (MARN).  On October 15, 2002, MARN issued an  environmental  permit under
Resolution  474-2002  for  the  SCMP.  On  October  20,  2002,  MARN  issued  an
environmental permit under Resolution 493-2002 for the Renewed SSGM Exploitation
area.  With these permits in hand,  the Company,  on November 5, 2002,  filed an
application for the Renewed SSGM for a period of 30 years.

Dividends

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

Impact of Inflation

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

Critical Accounting Policies

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

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

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

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

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

Management  is required to make  judgments  based on historical  experience  and
future expectations on the future abandonment cost, net of salvage value, of its
mining properties and equipment.  The Company reviews its estimate of the future
obligation  periodically  and will accrue the estimated  obligation based on the
adoption of SFAS No. 143 as described in the following section, "Recently Issued
Accounting  Developments."  The  implementation of this standard had no material
impact on the financial statements.

Recently Issued Accounting Developments

In July 2001, the Financial  Accounting  Standards  Board (FASB) issued SFAS No.
141,  "Business  Combinations,"  which  supersedes  Accounting  Principles Board
Opinion (APB) No. 16, "Business  Combinations." This Statement requires that all
business  combinations  be  accounted  for by the purchase  method,  establishes
specific  criteria for the  recognition  of intangible  assets  separately  from
goodwill  and  requires   unallocated   negative  goodwill  to  be  written  off
immediately as an  extraordinary  gain. The provisions of the Statement apply to
business  combinations  initiated after June 30, 2001. For business combinations
accounted for using the purchase  method before July 1, 2001,  the provisions of
this  Statement  are  effective  in the  first  quarter  of  2002.  The  Company
anticipates  that the  impact of this new  standard  should  not have a material
impact on the financial statements taken as a whole.

In July 2001, the Financial Accounting Standard Board (FASB) issued Statement of
Financial  Accounting  Standards (SFAS) No. 142,  "Goodwill and Other Intangible
Assets," which supersedes the Accounting  Principles Board (APB) Opinion No. 17,
"Intangible  Assets." This  Statement  addresses the accounting and reporting of
goodwill  and other  intangible  assets  subsequent  to their  acquisition.  The
Statement  also provides  specific  guidance on testing  goodwill and intangible
assets  for   impairment.   SFAS  No.  142   provides   that  (i)  goodwill  and
indefinite-lived  intangible assets will no longer be amortized, (ii) impairment
will be measured using various  valuation  techniques  based on discounted  cash
flows,  (iii)  goodwill will be tested for  impairment at least  annually at the
reporting unit level,  (iv) intangible  assets deemed to have an indefinite life
will be tested for impairment at least  annually and (v) intangible  assets with
finite lives will be amortized  over their useful lives.  All provisions of this
Statement are effective in the first  quarter of 2003.  The Company  anticipates
that the impact of this new standard  should not have any material impact on the
financial statements taken as a whole.

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

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

In April 2002,  the Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting Standards No. 145, Rescission of FASB Statements No. 4, 44
and 64, Amendment of FASB Statement No. 13, and Technical  Corrections (SFAS No.
145) which is generally effective for transactions occurring after May 15, 2002.
Through the rescission of FASB  Statements 4 and 64, SFAS No. 145 eliminates the
requirement that gains and losses from extinguishment of debt be aggregated and,
if  material,  be  classified  as an  extraordinary  item net of any  income tax
effect.  SFAS No. 145 made  several  other  technical  corrections  to  existing
pronouncements that may change accounting practice. The Company does not believe
SFAS No. 145 should have any  material  impact on its results of  operations  or
financial position.

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

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

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

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

Commodity Prices

When in production,  the Company's  earnings and cash flow will be significantly
impacted  by changes  in the market  price of gold.  Gold  prices can  fluctuate
widely and are affected by numerous factors, such as demand,  production levels,
economic policies of central banks,  producer  hedging,  and the strength of the
U.S.  dollar  relative  to other  currencies.  During the last five  years,  the
average  annual market price of gold has  fluctuated  between $271 per ounce and
$331 per  ounce.  The  Company  has not been  engaged in any  hedging  contracts
whatsoever.

Foreign Currency

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







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

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





<PAGE>
80

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........................................................................43

Financial Statements:

Consolidated Balance Sheets, Years Ended March 31, 2003 and 2002...............................................44
Consolidated Statements of Operations, Years Ended March 31, 2003, 2002 and 2001...............................45
Consolidated Statements of Changes in Shareholders' Equity
  Years Ended March 31, 2003, 2002 and 2001....................................................................46
Consolidated Statements of Cash Flows, Years Ended March 31, 2003, 2002 and 2001...............................47
Notes to Consolidated Financial Statements.....................................................................49

Supplementary Financial Data:

Report of Independent Accountant on the Financial Statement Schedules..........................................76
</TABLE>

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




<PAGE>





                                 REPORT OF INDEPENDENT PUBLIC ACCOUNTANT


To the Shareholders and Board of Directors
Commerce Group Corp.

In my opinion,  the  accompanying  consolidated  balance  sheets and the related
consolidated  statements of income,  comprehensive income,  shareholders' equity
and cash flows present fairly, in all material respects,  the financial position
of Commerce Group Corp., its subsidiaries, and the Commerce/Sanseb Joint Venture
at March 31, 2003 and 2002, and the results of all operations and cash flows for
each of the three years in the period  ended March 31, 2003 in  conformity  with
accounting principles generally accepted in the United States of America.  These
financial  statements are the  responsibility  of the Company's  management;  my
responsibility  is to express an opinion on these financial  statements based on
my audits. I conducted my audits of these statements in accordance with auditing
standards generally accepted in the United States of America, which require that
I plan and perform the audit to obtain  reasonable  assurance  about whether the
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statements,   assessing  the  accounting  principles  used  and
significant  estimates made by management,  and evaluating the overall financial
statement presentation.  I believe that my audits provide a reasonable basis for
my opinion.

Bruce Michael Redlin, CPA, LLC
Certified Public Accountant



West Allis, Wisconsin
May 12, 2003


<PAGE>
<TABLE>
<CAPTION>


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

                                                                                       2003
                                                                           ----------------
                                                                                                       2002
                                                                                                       ----
                                                   ASSETS
 Current assets
<S>                                                                          <C>              <C>
   Cash                                                                      $       28,004   $       39,081
   Investments                                                                      194,578          230,068
   Accounts receivable                                                              608,212          275,785
   Inventories                                                                       39,562           39,562
   Prepaid items and deposits                                                        41,901           25,047
                                                                           --------- ------  -------- ------
     Total current assets                                                           912,257          609,543

 Real estate (Note 5)                                                                23,336           23,336
 Property, plant and equipment, net                                               4,280,912        4,125,726
 Mining resources investment                                                     28,035,169       27,186,829
                                                                           --    ----------  --   ----------
   Total assets                                                                 $33,251,674      $31,945,434
                                                                                ===========      ===========
                                                 LIABILITIES
 Current liabilities
   Accounts payable                                                           $     454,719   $     409,970
   Notes and accrued interest payable to related parties  (Notes 6 & 7)           8,027,380       6,923,874
   Notes and accrued interest payable to others (Note 6)                            225,922         754,251
   Accrued salaries                                                               2,672,415       2,475,765
   Accrued legal fees                                                               326,941         314,804
   Other accrued expenses                                                           621,719         607,551
                                                                           -------  -------  --------------
       Total liabilities                                                         12,329,096      11,486,215

 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
   2003-none; 2002-none (Note 10)                                                         0               0

 Common stock, $0.10 par value:
   Authorized 50,000,000 shares; (Note 10)
   Issued and outstanding:
   2003-20,407,429 (Note 10)                                                      2,040,743
   2002-17,468,008 (Note 10)                                                                      1,746,801
 Capital in excess of par value                                                  18,997,412      18,792,109
 Retained earnings (deficit)                                                      (115,577)        (79,691)
                                                                           -----  ---------  --------------
     Total shareholders' equity                                                  20,922,578       20,459,219
                                                                            --   ----------  --   ----------
     Total liabilities and shareholders' equity                                 $33,251,674      $31,945,434
                                                                                ===========      ===========
</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


                                                                       2003              2002            2001
                                                                       ----              ----            ----
Revenues:

<S>                                                         <C>                             <C>
  Campground income                                         $             0                 $  $       75,470
                                                                                            0
  Real estate sales - net profit                                          0                           163,050
                                                            ---------------  ----------------  ------ -------
                                                                                            0
    Total revenues                                                        0                 0         238,520

Expenses:
  General and administrative                                     35,886                               112,392
                                                            ---------------  -------           ------ -------
                                                                                   43,209
    Total expenses                                                   35,886            43,209         112,392

Other income:
  Interest income                                                         0                 0           3,662
  El Salvador added value tax refund                                                       38
                                                            ---------------  ----------------
                                                                          0                                 0
                                                                          -                                 -
    Other income                                                                           38           3,662
                                                            ---------------  ----------------  --------------
                                                                          0

Net profit (loss)                                               $  (35,886)       $  (43,171)     $   129,790
  Credit (charges) for income taxes                                                         0
                                                            ---------------  ----------------
                                                                          0                                 0
                                                                          -                                 -
Net income (loss) after income tax credit (charge)              $  (35,886)       $  (43,171)     $   129,790
                                                                ===========       ===========     ===========

Net income (loss) per share (Note 2) basic                     $    (.0019)      $    (.0026)   $       .0092
                                                               ============      ============   =============

Net income (loss) per share (Note 2) diluted                   $    (.0018)      $    (.0025)   $       .0086
                                                               ============      ============   =============

Weighted av. common shares outstanding (Note 2)                  18,907,958        16,349,170      14,174,662
                                                                 ==========        ==========      ==========

Weighted av. diluted common shares (Note 2)                      19,867,958        17,019,170      15,094,662
                                                                 ==========        ==========      ==========

</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, 2003, 2002 and 2001


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

<S>                                                   <C>               <C>             <C>             <C>
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)

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

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

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

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

</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


                                                                                 2003            2002             2001
                                                                        -------------  --------- ----  --------   ----
Operating activities:
<S>                                                                       <C>             <C>                <C>
  Net income (loss)                                                       $  (35,886)     $  (43,171)        $ 129,790
                                                                          -----------     -----------        ---------
Adjustments  to  reconcile  net  income  (loss)  to net cash  used in  operating
activities:
Depreciation                                                                        0               0                0
Changes in assets and liabilities
  Decrease (increase) in account  receivables and investments               (296,936)           1,680            (303)
  Decrease (increase) in inventories                                                0               0           28,000
  Decrease (increase) in prepaid items and deposits                          (16,854)           8,934           24,698
  Decrease (increase) in real estate                                                0               0        1,156,500
  Increase (decrease) in accounts payable and accrued liabilities              58,915        (54,183)          137,243
  Increase (decrease) in accrued salaries                                     196,650         187,750          449,000
  Increase (decrease) in accrued legal fees                                    12,138           6,518           47,359
                                                                        ------ ------  -------- -----  -------  ------
  Total adjustments                                                          (46,087)         150,699        1,842,497
                                                                        ---  --------  ----   -------  --    ---------
  Net cash provided by (used in) operating activity                          (81,973)         107,528        1,972,287

Investing activities:
  Investment in mining resources                                          (1,003,527)     (1,638,682)      (2,233,369)
  Investments - other                                                                                          288,450
                                                                        ------------------------------------   -------
                                                                                    0               0
                                                                                    -               -
  Total                                                                   (1,003,527)     (1,638,682)      (1,944,919)

Financing activities:
  Net borrowings                                                              575,177       1,347,174        (865,919)
  Common stock issued                                                         499,246         198,660          549,011
                                                                        ----  -------  ----   -------  ----    -------
Net cash provided by (used in) financing activities                         1,074,423       1,545,834        (316,908)

Net increase (decrease) in cash and cash equivalents                         (11,077)          14,680        (289,540)
Cash - beg. of year                                                            39,081          24,401          313,940
                                                                        ------ ------  ------  ------  -----   -------
Cash - end of year                                                        $    28,004     $    39,081     $     24,400
                                                                          ===========     ===========     ============
</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
recorded and  eliminated from the interest income earned from the Joint Venture:
         $1,212,976 (2003), $1,026,940 (2002), and $1,063,468 (2001).

2.       There was no interest expense paid in cash for the periods ended March
 31, 2003, 2002, or 2001.

3.       The Company paid no income taxes during its fiscal periods ended March
 31, 2003, 2002, and 2001.

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  advances  to  Misanse,  a  52%-owned
         Corporation,  which amount was  approved,  confirmed  and ratified at a
         Misanse  shareholders' meeting held on January 12, 2003, and which will
         be an offset for rental charges included in the accounts payable due to
         Misanse.

6.       Inventory consists of mining 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
                               2003        693,221       $  69,322
                               2002      1,154,000        $120,660
                               2001        618,500       $  69,850

2.       Other non-cash items were for the unpaid salaries and legal fees; this
 amounted to $196,650 for 2003, $194,268 for 2002, and $449,360 for 2001.

3.       There were no non-cash equipment financing activities in 2003, 2002,
or 2001.




                                    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, 2003

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

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

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

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

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

(b)   Basis of presentation:

      Management estimates and assumptions:

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



<PAGE>


                 COMMERCE GROUP CORP., ITS SUBSIDIARIES, AND THE JOINT VENTURE
                    Notes to the Consolidated Financial Statements (Continued)
                                       March 31, 2003


(2)  Significant Accounting Policies

Consolidated Statements

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

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


</TABLE>

Investments

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

Accounts Receivable

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

Intercompany Balances

All intercompany balances and transactions have been eliminated.

Inventory

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

Deferred Mining Costs

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

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

Revenue Recognition

Revenue from the sale of gold 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 expenses include the amortization of assets
acquired, if any, under capital leases.  Replacements and major improvements are
capitalized.  When in  operation,  maintenance  and  repairs  will be charged to
expense based on average estimated  equipment usage.  Interest costs incurred in
the   construction  or  acquisition  of  property,   plant,  and  equipment  are
capitalized and amortized over the useful lives of the related assets. Since the
Company  suspended its gold processing  operations as of March 31, 2000, it also
ceased to depreciate its fixed assets.

Mineral Exploration and Development Costs

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

Recently Issued Financial Accounting Standards

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








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

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

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

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

Deferred Financing Costs

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

Interest Capitalization

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

Income Taxes

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

Comprehensive Income

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

Earnings  (Loss) Per Common Share

The  Company  has in the past years  reported  its  "Earnings  per Share"  which
presently complies with 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, 2003, 960,000 option shares were added to the weighted number of
shares which amount to 18,907,958 common shares issued and outstanding, then the
total number of fully diluted  shares amount to  19,867,958.  The loss per share
for this  period  ended  March 31,  2003 is $.0018  cents  per  share.  The same
assumptions were used for the same 2002 fiscal period.

Foreign Currency

The  Company is not  involved  in foreign  currency  transactions  because as of
January 1, 2001, the Republic of El Salvador,  Central  America adopted the U.S.
dollar system and pegged the exchange  rate at 8.75 colones to one U.S.  dollar.
Almost all of the money transactions in El Salvador are now conducted in U.S.
dollars.

Major Customer

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










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

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

                                           March 31, 2003                                    March 31, 2002
                           -------------------------------------------------------------------------------------------------------
                                            Accumulated                                       Accumulated
                               Cost         Amortization         Net            Cost          Amortization          Net
Mineral   Properties  and
<S>                        <C>                              <C>             <C>                                <C>
Deferred Development       $28,035,169                      $28,035,169     $27,186,829                        $27,186,829

Property, Plant and
Equipment                      6,533,055      2,252,143         4,280,912       6,377,869       2,252,143          4,125,726
                           -------------  --  ---------     -------------   -------------  --   ---------      -------------
                           $34,568,224       $2,252,143     $32,316,081     $33,564,698        $2,252,143      $31,312,555
                           ===========       ==========     ===========     ===========        ==========      ===========
</TABLE>

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

Impairments

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

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

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







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

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

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

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

Investments in Joint Venture

As of March 31, 2003, the Company's investments,  including charges for interest
expense  to the Joint  Venture,  were  $40,181,015  and  three of the  Company's
subsidiaries' advances were $590,265 for a total of $40,771,280.

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, 2003 and 2002,  the Company,  Sanseb and three of the Company's
 subsidiaries  have invested  (including  carrying
 costs) the following in its
Joint Venture:
<TABLE>
<CAPTION>

                                                                                       2003            2002
                                                                                       ----            ----
<S>                                                      <C>   <C>                  <C>             <C>
The Company's advances (net of gold sale proceeds) since 09/22/87                   $40,181,015     $36,729,923
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
                                                                                     34,160,023      31,989,058
Total:                                                                               81,357,398      75,735,341
Advances by the Company's three subsidiaries                                            590,265         590,265
                                                                                ------- -------  --------------
Combined total investment                                                           $81,947,663     $76,325,606
                                                                                    ===========     ===========








</TABLE>

SSGM Activity

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

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

(a)  Misanse Corporate Structure

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

(b)  SSGM Mining Lease

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

(c)  Mineral Concessions/Licenses

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

On  September  6, 2002,  at a meeting  held with the El  Salvadoran  Minister of
Economy and the DHM, it was agreed to submit an application for the Renewed SSGM
for a 30-year term and to simultaneously  cancel the concession obtained on July
23, 1987. On September 26, 2002, the Company filed this application. On February
28,  2003  (received  March 3,  2003) the DHM  admitted  to the  receipt  of the
application  and the Company  proceeded  to file  public  notices as required by
Article 40 of the El Salvadoran  Mining Law and its Reform (MLIR).  On April 16,
2003,  the Company's El Salvadoran  legal counsel filed with the DHM notice that
it believed that it complied with the requirements of Article 40, and that there
were no  objections;  and requested that the DHM make its inspection as required
by MLIR Article 42. Once issued, this Renewed SSGM will be pledged as collateral
to the same parties that held the previous concession as collateral.

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

On October 20, 2002, the Company applied for the New SSGM,  which covers an area
of 42 square kilometers and includes  approximately  1.2306 square kilometers of
the Renewed SSGM. The New SSGM is in the  jurisdiction of the City of Santa Rosa
de Lima in the Department of La Union and in the Nueva Esparta in the Department
of Morazan, Republic of El Salvador,  Central America. On February 24, 2003, the
DHM  issued  the New SSGM  for a period  of four  years  starting  from the date
following the  notification  of this  resolution  which was received on March 3,
2003. The New SSGM may be extended for two two-year  periods,  or for a total of
eight years. Besides the San Sebastian Gold Mine, three other formerly operative
gold and silver mines known as the La Lola Mine,  the Santa Lucia Mine,  and the
Tabanco Mine are included in the New SSGM.

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

On or about October 20, 2002, the Company filed an application  with the DHM for
the Nueva Esparta,  which consists of 45 square kilometers north and adjacent to
the New SSGM. This rectangular area is in the Departments of La Union (east) and
Morazan  (west) and in the  jurisdiction  of the City of Santa Rosa de Lima,  El
Salvador,  Central  America.  Included  in the Nueva  Esparta  are  eight  other
formerly operated gold and silver mines known as: the Grande Mine, the Las Pinas
Mine, the Oro Mine,  the Montemayor  Mine, the Banadero Mine, the Carrizal Mine,
the La Joya Mine and the Copetillo Mine. The application is pending.

Effective  February  1996,  the  Government  of El  Salvador  passed a law which
required  mining  companies to pay to it three percent of its gross  gold/silver
sale  receipts  and an  additional  one percent is to be paid to the El Salvador
municipality  which has jurisdiction of the mine site. As of July 2001, a series
of  revisions  to the El  Salvador  Mining  Law offer to make  exploration  more
economical. The principal change is that the fee has been reduced to two percent
of the gross gold receipts. The Company, in compliance with the new law, has, or
it plans to file applications for all of the mining  concessions in which it has
an interest.

SCMP Land and Building Lease

On  November  12,  1993,  the  Joint  Venture  entered  into an  agreement  with
Corporacion   Salvadorena   de   Inversiones   ("Corsain"),   an  El  Salvadoran
governmental agency, to lease for a period of ten years, approximately 166 acres
of land and  buildings  on which its gold  processing  mill,  plant and  related
equipment (the SCMP) are located,  and which is  approximately  15 miles west of
the SSGM site.  The basic annual lease  payment 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

Real Estate

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

San Felipe-El Potosi Mine ("Potosi")

Real Estate Lease Agreement

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

Montemayor Mine

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

(5)  Synopsis of Real Estate Ownership and Leases

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

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

                                                                                           03/31/03           03/31/02

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,  Misanse lease, real estate and all
other assets owned by the Company,  its  subsidiaries  and the Joint  Venture as
collateral. (Note 7)
                                                                                         $8,027,380         $6,923,874

Other

Short-term  notes and accrued  interest  (March 31, 2003,  $90,922 and March 31,
2002,  $416,305)  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.
                                                                                            225,922            754,252
                                                                         -----    -------   -----    -------

                                                                          Total:         $8,253,302         $7,678,126
</TABLE>

(7)  Related Party Transactions

The Company,  in an attempt to preserve  cash, had prevailed on its President to
 accrue his salary for the past 22 years,  including  vacation pay, for a total
of $2,636,515.

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, 2003:

The amount of cash funds which the Company has borrowed from its President  from
time to time, together with accrued interest, amounts to $5,521,516. 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,  2003,  an  aggregate  of  $824,866,
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.

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

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

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

Also with the consent  and  approval  of the  Directors,  a company in which the
President  has a 55%  ownership,  General  Lumber & Supply  Co.,  Inc.  (GLSCO),
entered into the following  agreements,  and the status is reflected as of March
31, 2003:

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

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

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

This related company has been issued an open-ended,  secured,  on-demand
 promissory note which amounts to $1,120,442;  the annual interest rate is four
 percent
plus the prime rate, but not less than 16%, and it is payable monthly.

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

On  January  3,  2003,  in  order  to  reduce  debt,  and in  consideration  for
cancellation  of  $100,625  of debt owed to  GLSCO,  the  Company  sold to GLSCO
575,000 of its restricted  common shares,  $.10 par value. On March 26, 2003, in
order to reduce debt, and in  consideration  for the  cancellation of $47,250 of
debt owed to GLSCO,  the Company sold 175,000 of its  restricted  common shares,
$.10 par value.

The Company's  Directors have consented and approved the following  transactions
of which the status of each are reflected as of March 31, 2003:

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 $429,391
which bears interest at an annual rate of prime plus three percent, but not less
than 16% and the interest is payable monthly.

The Directors  also have  acknowledged  that 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.  The Company owes her as an individual  and as a
consultant, the sum of $291,600 for services rendered from October 1994.

The Law Firm which  represents  the Company in which a son of the President is a
principal  is owed the sum of  $326,941  for  1,767.3  hours  of legal  services
rendered from July 1980 through March 31, 2003. 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 $131,165 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  66,667  common  shares in lieu of any cash
compensation   for  all  amounts  due  to  them  as  of  March  31,  2003.   The
Chairman/President does not receive any Director fees.

The Company  advances  funds,  allocates  and charges its  expenses to the Joint
Venture. The Joint Venture in turn capitalizes all of these advances,  costs and
expenses.  When full  production  commences,  these  capitalized  costs  will be
charged as an expense  based on a per 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  recording  the amount that is due to the Company
from the Joint Venture.
<TABLE>
<CAPTION>

Company Net Advances to the Joint Venture
                                                           2003                                   2002
                                                           ----                                   ----
                                                                Interest Charges                       Interest Charges
                                             Total Advances                         Total Advances
<S>                                            <C>                <C>                 <C>                <C>
Beginning                                      $36,729,923        $20,448,289         $32,519,136        $16,973,241
March 31 fourth quarter                           3,451,092          3,303,446           4,210,787          3,475,048
                                           ----   ---------     ---- ---------    ----   ---------     ---- ---------
Total Company advances                          40,181,015          23,751,735         36,729,923          20,448,289
Advances by three of the Company's
subsidiaries                                        590,265                                590,265
                                           -------  -------     -------------------------  -------
                                                                       0                                      0
                                                                       -                                      -
March 31 total net advances                    $40,771,280        $23,751,735         $37,320,188        $20,448,289
                                               ===========        ===========         ===========        ===========
</TABLE>

(8)  Commitments

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

(9)  Income Taxes

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

(10)  Description of Securities

a.  Common Stock

The Company's  Wisconsin  Certificate of Incorporation  effective as of April 1,
1999  authorizes  the issuance of 50,000,000  shares of common stock,  $0.10 par
value per share of which  20,407,429  shares were issued and  outstanding  as of
March 31,  2003.  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, 2003 or 2002.

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

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

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

                                     03/31/03                    03/31/02                    03/31/01
                             ------------------------------------------------------------------------------------
                                            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.             670,000     $0.22          920,000     $1.27          1,254,900     $2.19
Granted                           290,000     $0.19          520,000     $0.25            150,000     $0.12
Exercised                               0      N/A                 0      N/A                   0      N/A
Forfeited                               0      N/A         (500,000)      N/A                   0      N/A
Expired                                 0      N/A         (270,000)      N/A           (484,900)      N/A
                             ------------      ---         ---------      ---           ---------      ---
Outstanding, end of yr.           960,000     $0.21          670,000     $0.22            920,000     $1.27
                                  =======     =====     ===  =======     =====      ===   =======     =====
</TABLE>

A summary of the outstanding stock options as of March 31, 2003, follows:

                                            Weighted Average
 Range of Exercise         Amount        Remaining Contractual  Weighted Average
       Prices            Outstanding              Life            Exercise Price
    Up to $2.99             960,000            .8068 years                $0.21

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

d.  Stock Rights - To The President

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

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





e.  Share Loans - Others

A series of  borrowings  of the  Company's  common shares were made from time to
time under the provision that the owners would sell said shares as the Company's
designee,  with the proceeds  payable to the Company.  In exchange,  the Company
agreed  to pay  these  shares  loaned  within  31 days or  less by  issuing  its
restricted  common shares,  together with interest payable in restricted  common
shares payable at a negotiated rate of interest  normally payable in advance for
a period of one year.  As of March 31,  2003,  there were no shares due to other
parties for shares borrowed or for interest payment.

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

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

On June 10, 2002, the Company filed its fifth Securities and Exchange Commission
Form S-8 Registration  Statement No. 333-90122 under the Securities Act of 1933,
and it registered  1,500,000 of the Company's  $0.10 par value common shares for
the  purpose of  distributing  shares  pursuant  to the plan  contained  in such
registration.  From the 1,500,000 shares  registered  51,597 shares were issued,
and 1,448,403 shares remain to be issued as of March 31, 2003.

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

This  account was  established  for the purpose of  compensating  the  Company's
employees for benefits such as retirement,  severance pay, and all other related
compensation that is mandatory under El Salvadoran labor regulations,  and/or as
determined  by the  Officers  of the  Corporation.  The  Directors  provide  the
Officers of the Company  with the  authority  to issue its common  shares to the
CGCEBA  on an as needed  basis.  Under  this  plan,  payment  can be made to any
employee of the Company or the Company's subsidiaries.  The CGCEBA has sold some
of the shares  issued to this account from time to time to meet its  obligations
to its El Salvadoran employees. As of March 31, 2003, 321,000 shares remained in
the account.  As of April 1, 2002, there were 520,000 shares in this account. An
additional  400,000 shares were issued and 599,000  shares were sold,  leaving a
balance of 321,000 shares as of March 31, 2003.

(11)  Litigation

There is no known pending litigation.

(12)  Certain Concentrations and Concentrations of Credit Risk

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

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

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

(13) Commitments and Contingencies

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

(14) Business Segments

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

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














<TABLE>
<CAPTION>



                                           Mining *1
                                         El Salvador,            Campground
                                        Central America       Missouri, U.S.A.        Corporate Headquarters
Year ended March 31, 2003
<S>                                    <C>                       <C>                            <C>
  Sales and revenues                   $                0        $              0               $            0
  Depreciation & amortization                           0                       0                      0
  Operating income (loss)                               0                       0              (35,886)
  Total assets                                 33,029,998                       0              221,676
  Capital expenditures                          1,003,526                       0                      0

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

Year ended March 31, 2001
  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
</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.

                                                         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 Two  Directors"  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.









Item 14.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains a system of disclosure  controls and procedures.  The term
"disclosure   controls  and  procedures,"  as  defined  by  regulations  of  the
Securities and Exchange Commission ("SEC"),  means controls and other procedures
that are  designed to ensure that  information  required to be  disclosed in the
reports  that the  Company  files or  submits  to the SEC under  the  Securities
Exchange Act of 1934, as amended (the "Act"), is recorded, processed, summarized
and  reported,  within the time period  specified  in the SEC's rules and forms.
Disclosure  controls and procedures include,  without  limitation,  controls and
procedures  designed to ensure that information  required to be disclosed by the
Company  in the  reports  that it files or  submits  to the SEC under the Act is
accumulated  and  communicated  to  the  Company's  management,   including  its
principal  executive officer and its principal financial officer, as appropriate
to  allow  timely  decisions  to be  made  regarding  required  disclosure.  The
Company's  Chief Executive  Officer who is also the Chief Financial  Officer and
the Executive Vice  President/Secretary  have evaluated the Company's disclosure
controls and  procedures  as of a date within 90 days of the filing date of this
Annual  Report on Form 10-K and have  concluded  that the  Company's  disclosure
controls and procedures are effective as of the date of such evaluation.

Changes in Internal Controls

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


<PAGE>


                                                                PART IV

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

(a)  Financial Statements and Schedules
<TABLE>
<CAPTION>

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

<S>                                                                                                           <C>
Report of Independent Accountant on the Financial Statement Schedules..........................................76

Schedule IV (1) Indebtedness of Related Parties................................................................77

Schedule IV (2) Indebtedness to Related Parties................................................................79
</TABLE>

(b)  Reports on Form 8-K

A Form 8-K was  filed  on  March  5,  2003,  to  report  receipt  of the New San
Sebastian  Gold Mine  Exploration  Concession/License  and the admittance of the
Renewed San Sebastian Gold Mine Exploitation  Concession/License from the Office
of the El Salvador  Ministry of Economy  through its Department of  Hydrocarbons
and Mines.

(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  t
 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.)




   Exhibit No.                                     Description of Exhibit

       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.)

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

       4.1         Three-Year  Stock Option  Agreement dated March 13, 2001, and
                   expiring on March 13, 2004, to purchase 100,000 common shares
                   at $.10 per share.  (Incorporated by reference to Exhibit 4.9
                   of the  Company's  Form  10-K for the year  ended  March  31,
                   2001.)

       4.2         Three-Year  Stock Option  Agreement dated March 13, 2001, and
                   expiring on March 13, 2004, to purchase  50,000 common shares
                   at $.15 per share. (Incorporated by reference to Exhibit 4.10
                   of the  Company's  Form  10-K for the year  ended  March  31,
                   2001.)

       4.3         Two-Year  Stock  Option  Agreement  dated July 2,  2001,  and
                   expiring on July 2, 2003, to purchase 80,000 common shares at
                   $.25 per share.  (Incorporated by reference to Exhibit 4.3 of
                   the Company's Form 10-K for the year ended March 31, 2002.)

       4.4         Two-Year  Stock  Option  Agreement  dated July 2,  2001,  and
                   expiring on July 2, 2003, to purchase  100,000  common shares
                   at $.25 per share.  (Incorporated by reference to Exhibit 4.4
                   of the  Company's  Form  10-K for the year  ended  March  31,
                   2002.)

       4.5         Two-Year  Stock  Option  Agreement  dated July 2,  2001,  and
                   expiring on July 2, 2003, to purchase  250,000  common shares
                   at $.25 per share.  (Incorporated by reference to Exhibit 4.5
                   of the  Company's  Form  10-K for the year  ended  March  31,
                   2002.)

       4.6         Two-Year  Stock  Option  Agreement  dated July 2,  2001,  and
                   expiring on July 2, 2003, to purchase 70,000 common shares at
                   $.25 per share.  (Incorporated by reference to Exhibit 4.6 of
                   the Company's Form 10-K for the year ended March 31, 2002.)

       4.7         Two-Year  Stock  Option  Agreement  dated July 2,  2001,  and
                   expiring on July 2, 2003, to purchase 20,000 common shares at
                   $.25 per share.  (Incorporated by reference to Exhibit 4.7 of
                   the Company's Form 10-K for the year ended March 31, 2002.)

       4.8         Two-Year  Stock Option  Agreement  dated April 19, 2002,  and
                   expiring on April 19, 2004, to purchase  80,000 common shares
                   at $.15 per share.  (Incorporated by reference to Exhibit 4.8
                   of the  Company's  Form  10-K for the year  ended  March  31,
                   2002.)



   Exhibit No.                                     Description of Exhibit

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

                   Subsequent Options Issued:

      4.10*        Two-Year  Stock Option  Agreement  dated August 21, 2002, and
                   expiring on August 21, 2004, to purchase 40,000 common shares
                   at $.22 per share.

      4.11*        Two-Year Stock Option Agreement dated September 20, 2002, and
                   expiring on September  20, 2004,  to purchase  65,000  common
                   shares at $.22 per share.

      4.12*        Two-Year Stock Option Agreement dated September 25, 2002, and
                   expiring on September  25, 2004,  to purchase  65,000  common
                   shares at $.22 per share.

        9          Voting Trust Agreement--not applicable.

       10          Material contracts regarding sale of assets and deferred
compensation.

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

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

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

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

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

      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.)

   Exhibit No.                                     Description of Exhibit

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

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

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

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

      10.13        Lilac 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.)

       11*         Schedule of Computation of Net Income Per Share

       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 12, 2003.

      99.2*        Confirmation Agreement, Edward L. Machulak, May 12, 2003.

      99.3*        Confirmation Agreement,  Edward L. Machulak Rollover
 Individual Retirement Account, May
                   12, 2003.





   Exhibit No.                                     Description of Exhibit

      99.4*        Confirmation Agreement,  Sylvia Machulak as an individual and
                   for her Rollover Individual Retirement Account, May 12, 2003.

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

      99.6         S.E.C.  Form S-8  Registration  Statement No. 333-61650 filed
                   under the  Securities  Act of 1933 as  amended  and  declared
                   effective May 25, 2001,  registering one and one-half million
                   of its common shares,  ten cents par value.  (Incorporated by
                   reference as this S.E.C. Form S-8 Registration  Statement had
                   been filed on May 25,  2001.) All of these  shares  have been
                   issued as of March 31, 2003.

      99.7         S.E.C. Form S-8 Registration  Statement No. 333-90122 filed
under the Securities Act of
                   1933, as amended and declared  effective  June 10, 2002,
registering  one and one-half
                   million of its common shares,  ten cents par value.
 (Incorporated by reference as this
                   S.E.C.  Form S-8  Registration  Statement had been filed on
June 10,  2002.)  1,448,403
                   shares remain to be issued as of March 31, 2003.

    99.7(a)*       Consent  of  Independent   Certified  Public   Accountant  to
                   incorporate by reference in the S.E.C.  Form S-8 Registration
                   Statement No.  333-90122  filed under the  Securities  Act of
                   1933 as amended  and  declared  effective  June 10,  2002 the
                   Certified  Public  Accountant's  report  dated  May 12,  2003
                   relating to the  financial  statements of the Company for the
                   years ended March 31, 2003 and 2002.

      99.8*        Certification of Chief Executive  Officer and Chief Financial
                   Officer pursuant to Section 906 of the  Sarbanes-Oxley Act of
                   2002.

      99.9*        Certification of Executive Vice President and Secretary
 pursuant to Section 906 of the
                   Sarbanes-Oxley Act of 2002.

      99.10        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, 2003

                                                        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 12, 2003.

                                                          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 12, 2003
----------------------                                                                          ------------
Edward L. Machulak                Executive   Committee,   Member  of  Audit  Committee,
                                  Director-Emeritus,    President,    Treasurer,   Chief
                                  Executive, Operating and Financial Officer

/s/ Edward A. Machulak            Director,     Member    of    Executive     Committee,        May 12, 2003
----------------------                                                                          ------------
Edward A. Machulak                Director-Emeritus,   Executive   Vice   President  and
                                  Secretary

/s/ Sidney Sodos                  Director and Member of Audit Committee                        May 12, 2003
----------------                                                                                ------------
Sidney Sodos

/s/ John H. Curry                 Director and Member of Audit Committee                        May 12, 2003
-----------------                                                                               ------------
John H. Curry

</TABLE>


<PAGE>


                                  CERTIFICATION OF CHIEF EXECUTIVE OFFICER


I, Edward L. Machulak, Chairman, President, Treasurer, Chief Executive,
 Operating and Financial Officer of Commerce Group Corp., certify that:

1.      I have reviewed this annual report on Form 10-K of Commerce Group Corp.;

2.       Based on my  knowledge,  this annual report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances  under which
         such  statements  were made, not misleading  with respect to the period
         covered by this annual report;

3.       Based on my knowledge,  the financial  statements,  and other financial
         information  included  in this  annual  report,  fairly  present in all
         material  respects the financial  condition,  results of operations and
         cash flows of the  registrant as of, and for, the periods  presented in
         this annual report;

4.       The  registrant's  other  certifying  officer and I are responsible for
         establishing  and  maintaining  disclosure  controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:

         a)       designed  such  disclosure  controls and  procedures to ensure
                  that  material   information   relating  to  the   registrant,
                  including its consolidated  subsidiaries,  is made known to us
                  by others  within  those  entities,  particularly  during  the
                  period in which this annual report is being prepared;

         b)       evaluated the  effectiveness of the registrant's  disclosure
 controls and procedures as of a date within 90 days prior to the filing date of
                  this annual report (the "Evaluation Date"); and

         c)       presented in this annual report our conclusions  about the
 effectiveness of the disclosure controls and procedures based on our evaluation
                  as of the Evaluation Date;

5.       The registrant's other certifying  officer and I have disclosed,  based
         on our most recent  evaluation,  to the  registrant's  auditors and the
         audit  committee  of  registrant's   board  of  directors  (or  persons
         performing the equivalent function):

         a)       all  significant  deficiencies  in the design or operation of
internal  controls which could  adversely  affect the  registrant's  ability to
                  record,  process,  summarize and report financial data and
 have identified for the registrant's  auditors any material weaknesses in
internal
                  controls; and

         b)       any fraud,  whether or not material,  that involves
 management or other employees who have a significant role in the  registrant's
  internal
                  controls; and

6.       The registrant's  other certifying officer and I have indicated in this
         annual report whether or not there were significant changes in internal
         controls or in other factors that could  significantly  affect internal
         controls  subsequent  to  the  date  of  our  most  recent  evaluation,
         including   any   corrective   actions   with  regard  to   significant
         deficiencies and material weaknesses.

Date:  May 12, 2003                                  /s/ Edward L. Machulak
                                                     ----------------------
                                                     Edward L. Machulak
                                                 Chairman, President, Treasurer,
                                                 Chief Executive, Operating and
                                                     Financial Officer


<PAGE>


                         CERTIFICATION OF EXECUTIVE VICE PRESIDENT AND SECRETARY

I, Edward A. Machulak, Executive Vice President and Secretary of Commerce Group
Corp., certify that:

1.     I have reviewed this annual report on Form 10-K of Commerce Group Corp.;

2.       Based on my  knowledge,  this annual report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances  under which
         such  statements  were made, not misleading  with respect to the period
         covered by this annual report;

3.       Based on my knowledge,  the financial  statements,  and other financial
         information  included  in this  annual  report,  fairly  present in all
         material  respects the financial  condition,  results of operations and
         cash flows of the  registrant as of, and for, the periods  presented in
         this annual report;

4.       The  registrant's  other  certifying  officer and I are responsible for
         establishing  and  maintaining  disclosure  controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:

         a)       designed  such  disclosure  controls and  procedures to ensure
                  that  material   information   relating  to  the   registrant,
                  including its consolidated  subsidiaries,  is made known to us
                  by others  within  those  entities,  particularly  during  the
                  period in which this annual report is being prepared;

         b)       evaluated the  effectiveness of the registrant's  disclosure
 controls and procedures as of a date within 90 days prior to the filing date of
                  this annual report (the "Evaluation Date"); and

         c)       presented in this annual report our conclusions  about the
 effectiveness of the disclosure controls and procedures based on our evaluation
                  as of the Evaluation Date;

5.       The registrant's other certifying  officer and I have disclosed,  based
         on our most recent  evaluation,  to the  registrant's  auditors and the
         audit  committee  of  registrant's   board  of  directors  (or  persons
         performing the equivalent function):

         a)       all  significant  deficiencies  in the design or operation of
 internal  controls which could  adversely  affect the  registrant's  ability to
                  record,  process,  summarize and report financial data and
have identified for the registrant's auditors any material weaknesses in
 internal controls; and

         b)       any fraud,  whether or not material,  that involves
 management or other employees who have a significant role in the  registrant's
  internal controls; and

6.       The registrant's  other certifying officer and I have indicated in this
         annual report whether or not there were significant changes in internal
         controls or in other factors that could  significantly  affect internal
         controls  subsequent  to  the  date  of  our  most  recent  evaluation,
         including   any   corrective   actions   with  regard  to   significant
         deficiencies and material weaknesses.

Date:  May 12, 2003                                  /s/ Edward A. Machulak
                                                     ----------------------
                                                     Edward A. Machulak
                                                     Executive Vice President,
                                                     and Secretary



<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, 2003, 2002, 2001, 2000 and 1999, is included in
this Form 10-K. In connection  with my audits of such  financial  statements,  I
have also audited the following:  supplementary  income  statement  information,
selected  financial data report, and the related financial  statement  schedules
listed in Item 15(a) of this Form 10-K.

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

Bruce Michael Redlin, CPA, LLC
Certified Public Accountant



West Allis, Wisconsin
May 12, 2003




<PAGE>

<TABLE>
<CAPTION>

                                                      COMMERCE GROUP CORP. AND CONSOLIDATED SUBSIDIARIES

                                                                        SCHEDULE IV (1)
                                                         INDEBTEDNESS OF RELATED PARTIES - NON CURRENT
                                                          YEARS ENDED MARCH 31, 2003, 2002, AND 2001


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

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

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

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

</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.  The addition to
        indebtedness  is netted to  include  any  adjustments  for  payments  or
        credits.

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

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

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

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

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

</TABLE>

(1)      San Sebastian Gold Mines, Inc. (SSGM) in which Commerce Group Corp.
 owns 82 1/2% of its issued and outstanding common shares.

(2)      The advances to SSGM primarily consist of the interest due to the
 Company on SSGM's outstanding indebtedness.


<PAGE>

















                                       This Page Left Blank Intentionally.


<PAGE>

<TABLE>
<CAPTION>

                                                      COMMERCE GROUP CORP. AND CONSOLIDATED SUBSIDIARIES

                                                                        SCHEDULE IV(2)
                                                                INDEBTEDNESS TO RELATED PARTIES
                                                      CURRENT YEARS ENDED MARCH 31, 2003, 2002, AND 2001

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

Year ended March 31, 2003
<S>                                             <C>                 <C>           <C>                       <C>
President of the Company                        $4,643,856          $877,660(a)   $               0         $5,521,516
President's RIRA                                   703,647           121,219(b)                    0           824,866
President's Affiliated Company                   1,098,193            22,249(c)                    0         1,120,442
President's Wife's RIRA                            366,289            63,102(d)                    0           429,391
Others                                             111,889            19,276(d)                    0           131,165
                                            -----  -------   -------  ------      ------------------   -----   -------
 Total, notes payable                           $6,923,874        $1,103,506      $               0         $8,027,380
                                                ==========        =============   =================         ==========

President's Accrued Salary                      $2,457,765      $    178,750(e)   $               0         $2,636,515
                                                ==========      ============      =================         ==========

President's Wife's Consulting Fees             $   255,600       $                $               0        $   291,600
                                               ===========       ======           =================        ===========
                                                             36,000(f)

Legal fees (President's son is a
principal)                                     $   314,804       $                $               0        $   326,941
                                               ===========       ======           =================        ===========
                                                             12,137(g)

Year ended March 31, 2002
President of the Company                        $3,676,503          $967,353(a)   $               0         $4,643,856
President's RIRA                                   599,768           103,879(b)                    0           703,647
President's Affiliated Company                     926,205           171,988(c)                    0         1,098,193
President's Wife's RIRA                            312,459            53,830(d)                    0           366,289
Others                                              95,445            16,444(d)                    0           111,889
                                            ------- ------   -------  ------      ------------------   -----   -------
 Total, notes payable                           $5,610,380       $1,313,494       $               0         $6,923,874
                                                ==========       =============    =================         ==========

President's Accrued Salary                      $2,279,015      $    178,750(e)   $               0         $2,457,765
                                                ==========      ============      =================         ==========

President's Wife's Consulting Fees             $   219,600       $                $               0        $   255,600
                                               ===========       ======           =================        ===========
                                                             36,000(f)

Legal fees (President's son is a
principal)                                     $   308,286       $                $               0        $   314,804
                                               ===========       =======          =================        ===========
                                                             6,518(g)

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            14,025(d)                                 95,445
                                            ------- ------   ------   ------        ----------------   -------  ------
                                                                                  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
                                               ===========      ============      ==================       ===========
</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 July 2, 2001,  two-year  stock  options to  purchase  250,000 of the
Company's restricted common shares at a price of $0.25 a share.

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

(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, 2001 through  March 31,
         2002 (one year at $13,750).

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

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

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