The following discussion provides information on the results of operations and the financial condition, liquidity and capital resources for the third quarter periods ended December 31, 2008 and 2007. The financial statements of the Company and the notes thereto contain detailed information that should be referred to in conjunction with this discussion.

OVERVIEW

Today Commerce is a company with substantial gold and silver mineralized material and a great potential for locating and exploiting gold and silver ore reserves. The Company is in the precious metals exploration business with all of its mines presently located in the Republic of El Salvador, Central America. The Company's objective and goals are to increase shareholder value by finding a compatible acquisition, merger or other business arrangement by which gold and silver ore reserves within the concession/license areas granted to the Company by the Government of El Salvador (GOES) will be identified, developed and processed. Substantial capital expenditures are required to find, develop and process gold ore. The Company's geologists and engineers believe that it has potentially significant precious metal reserves which can be identified and developed by continuous and expanded exploration. The strategies to accomplish these goals include, whether by Commerce or through an arrangement with another respected company, commencement of production of gold and silver when adequate funding is available, locating and identifying gold and silver ore reserves by a more aggressive exploration program, continuing the good relationship established over the past 38 years with its employees, resolving its permit issues with the El Salvadoran Government, earning profits and respecting the citizens surrounding its mining properties.

On December 6, 2006, the Company's El Salvadoran legal counsel filed a complaint with the El Salvadoran Supreme Court Administrative Division claiming that the El Salvadoran Office of the Ministry of Environment and Natural Resources (MARN) has revoked two of its El Salvadoran environmental permits for mining exploitation, without any prior notice, without a right to a hearing and the right of due process, based on misguided assertions, and contrary to El Salvadoran law. In addition, the Company's legal counsel stated that there is a lack of legal foundation for the sanctions and excess authority exercised by MARN. Reference is made to Exhibit 10.20 of the Company's Form 10-K/A for its fiscal year ended March 31, 2007, for an English translation of that complaint. Also, in October 2008 the Directorate of Mines notified the Company that it was not honoring the Company's previous request for an extension of the exploration permits at the San Sebastian and Nueva Esparta areas. The Company believes this notice is unwarranted and an appeal is pending.

On July 18, 2008 the Company entered into a non-binding letter of intent for a proposed acquisition/merger with Voter Communications, Inc. The letter of intent which discloses the general terms and conditions was attached as Exhibit 99.1 of the Form 8-K that the Company filed with the SEC on July 23, 2008. Given the subsequent, unexpected downward trend in the primary and secondary public equity markets, the parties do not believe that it is feasible to pursue the objectives of the proposed merger at this time. Based on this, Voter Communications, Inc. has arranged for alternative private equity financing to accomplish its business objectives in 2009.

Earlier in the year Commerce entered into a tentative arrangement with another company to perform exploration in El Salvador. However, that company has decided not to continue its efforts to enter into a transaction relating to Commerce's San Sebastian Gold Mine in the Country of El Salvador. Therefore, Commerce's directors and officers continue to seek a compatible financial or business arrangement.

The Company is determined to obtain the permissions needed from El Salvador and to enter into a business arrangement through which gold will be produced at its San Cristobal Mill and Plant facilities and an open-pit, heap-leach operation constructed on its San Sebastian Gold Mine site which 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.

All of the Company's mining interests are located in the Republic of El Salvador, Central America, in the Departments of La Union and Morazan. Our geologists have made the following estimates of mineralized material:

SSGM MINERALIZED MATERIAL

Gold Mineralized Material (12/31/08)                      Tons
                                                          ----
Mineralized virgin material
(includes 960,000 tons of dump material)               14,404,096
Stope fill (estimated)                                  1,000,000
Estimated other mineralized material and open pit     122,815,134
                                                      -----------
  Total estimated mineralized material                138,219,230

Because the Company does not have a final feasibility study completed within the past five years, a determination that the property contains valid reserve estimates is not possible at this time.

          COMMERCE GROUP CORP., ITS SUBSIDIARIES, AND THE JOINT VENTURE
                         SEC FORM 10-Q - DECEMBER 31, 2008
                   PART I - FINANCIAL INFORMATION (CONTINUED)


                                                       Acres
                                                       -----
 Exploitation/Exploration      Department or     Exploi-  Explor-
    Concessions/Licenses         Location        tation   ation     Total
 ------------------------      -------------     ------   -------   -----
Renewed San Sebastian Gold Mine  La Union          304     1,394    1,698
New San Sebastian Gold Mine      La Union/Morazan          8,372    8,372
Nueva Esparta                    La Union/Morazan         11,115   11,115
                                                   ---    ------   ------
  Total Acreage                                    304    20,881   21,185

*Legal appeals are currently pending with regard to the denial of the Company's exploration/exploitation concessions/licenses.

POTENTIAL RESERVES AND MINERALIZED MATERIAL

In the past, the Company has reported possible mineral reserves of up to 3.4 million ounces of gold as part of its San Sebastian Gold Mine and has reported mineralized material on a number of its properties. Because the Company does not have a final feasibility study completed within the past five years, a determination that the property contains valid reserve estimates is not possible at this time.

There are a number of uncertainties inherent in estimating quantities of mineralized material, including many factors beyond the Company's control. Mineralized material estimates and estimates of gold content 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 mineralized materials containing relatively lower grades of mineralization uneconomic to mine at this time. Further, availability of permits, changes in operating and capital costs, and other factors could materially and adversely affect estimates of commercially useful mineralized material. The Company uses its mineralized material estimates and estimates of gold content in determining the unit basis for mine depreciation and amortization of closure costs. Changes in estimates could significantly affect these items.

It is expected that the carbon-in-leach process will be used to produce gold at the SSGM. As the solution percolates through the heap, gold is dissolved from the mineralized material into solution. This solution is collected and processed with activated carbon, which precipitates the gold out of solution and onto the carbon. Through the subsequent processes of acid washing and pressure stripping, the gold is returned to a solution in a more highly concentrated state. This concentrated solution of gold is then processed in an electrowinning circuit, which re-precipitates the gold onto cathodes for melting into gold dore bars.

When the Company was in production certain estimates regarding this overall process were required for inventory accounting and reporting of gold estimates, the most significant of which are the amount and timing of gold to be recovered. Although the Company can calculate with reasonable certainty the tonnage and grades of gold mineralized material placed under the mill process system and laboratory analysis, the recovery and timing factors are influenced by the grade of the mineralized material under leach and the particular mineralogy of a deposit being mined. The Company's estimates are based on laboratory leaching models which approximate the recovery from gold mineralized material under leach. From this data the Company has estimated the amount of gold that can be recovered and the time it will take for recovery. When the Company is in production, the Company will continually monitor the actual monthly and cumulative recovery from the carbon-in-leach process as a check against the laboratory models.

The Company has no revenues because it is not in production and it requires funds to purchase the necessary equipment, inventory and working capital to commence processing the mineralized material. The Company is determined to find a business arrangement that will enable production to commence. It plans to joint venture, merge, be acquired or enter into a business combination that will benefit all parties concerned.

The Company believes that at least $30 million (net) in funding is needed for the expansion of exploration opportunities and to resume production of gold and silver from its San Sebastian Gold Mine located near the City of Santa Rosa de Lima, Republic of El Salvador, Central America. The Company expects that the $30 million would be used as follows:

To resume the production of gold and silver
at its San Cristobal Mill and Plant using
its higher grade mineralized material, its
funding needs amount to                          U.S.  $4 million net

To set up an open-pit, heap-leach operation
at the San Sebastian Gold Mine site              U.S. $19 million net

For preliminary exploration for a part or
for all of the 10,000 acres of the New San
Sebastian Exploration License area
consisting of three former mine operations
up to                                            U.S. $ 2 million net

For preliminary exploration for a part or
for all of the 11,000 acres of the Nueva
Esparta Exploration License area consisting
of eight former mine operations up to            U.S. $ 2 million net

Contingent fund availability, inflation
costs and for accelerating the above
projects                                         U.S. $ 3 million net
                                                 ----------------------
Total                                            U.S. $30 million net

All of the Company's mines are located in the Republic of El Salvador, Central America. The Government of El Salvador (GOES) via the Ministry of Economy's office has issued the following three concessions/licenses:

1. On or about May 20, 2004, the Renewed San Sebastian Gold Mine Exploitation Concession (Renewed SSGM) was issued by the GOES for a period of 30 years. This gave the Company the right to extract and process mineralized material to produce gold and silver from the San Sebastian Gold Mine site. Because the Company does not have a final feasibility study completed within the past five years, a determination that the property contains valid reserve estimates is not possible at this time. On or about September 13, 2006, the El Salvador Ministry of the Environment delivered to Commerce's El Salvadoran legal counsel its revocation of the environmental permits issued for the SSGM exploitation concession and the SCMP. This Company's legal counsel on December 6, 2006, filed with the El Salvadoran Court of Administrative Litigation of the Supreme Court of Justice two complaints relating to this matter. (See the Company's discussion in the section entitled "Environmental Matters.") These legal proceedings are pending.

2. On or about February 27, 2003, the GOES granted to the Company the New San Sebastian Exploration License (New San Sebastian Exploration License) consisting of approximately 10,070 acres which encompass the Renewed SSGM Exploitation Concession. This license gave the right to exploration of the subsurface in this area. In this area there are three formerly operated mines: La Lola Mine, Santa Lucia Mine and Tabanco Mine. In October 2008 the Directorate of Mines notified the Company that it was not honoring the Company's previous request for an extension of the exploration permits at the San Sebastian and Nueva Esparta areas. The Company believes this notice is unwarranted and an appeal is pending.

3. On May 25, 2004 the GOES granted to the Company the Nueva Esparta Exploration License consisting of 11,115 acres of area to explore. This exploration license area abuts the New San Sebastian Exploration License area and it has eight formerly operated gold/silver mines: 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 Company did exploration work on the Montemayor Mine from 1995 - 1997. In October 2008 the Directorate of Mines notified the Company that it was not honoring the Company's previous request for an extension of the exploration permits at the San Sebastian and Nueva Esparta areas. The Company believes this notice is unwarranted and an appeal is pending.

The Company is a U.S. Wisconsin chartered corporation engaged in exploration for gold and silver, with its primary asset being the San Sebastian Gold Mine (SSGM). The SSGM is located in the Republic of El Salvador, Central America and produced over one million ounces of gold during the 1900-1917 period. The Company became involved as an investor and then as a majority owner. Gold and silver was mined from mid-1972 through the first quarter of 1978. Mining ceased due to the civil unrest in El Salvador. A peace pact was entered into in December 1992 conditioned upon meeting the terms and conditions of this peace agreement during a three-year period. Mining of gold and silver commenced on April 1, 1995 and the operations were suspended during the first quarter of 2000 due to the low selling price of gold (lowest price about $252) at that time and the need to retrofit, restore and expand the San Cristobal Mill and Plant (SCMP). The Company presently is seeking permission from MARN and funding to restore the SCMP and to set up an open-pit, heap-leach operation at the SSGM site. Its alternative is to joint venture or to enter into a merger or other business combination.

FINANCING ACTIVITIES, LIQUIDITY AND CAPITAL RESOURCES

The Company wants to proceed with its plan to re-start its San Cristobal Mill and Plant operations, but it will require financing for the expansion of its production capacity from 200 to 500 tons per day and to retrofit this plant. In order to obtain funding there are multiple sources which could include private equity investment, public equity offering, debt, and other forms of creative funding approaches.

Additional equipment has to be purchased, delivered and installed and the SCMP has to be retrofitted, overhauled and its production capacity should be expanded.

The Company will endeavor to commence an open-pit, heap-leaching operation at the SSGM. 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. $19 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 $19,000,000 proceeds is as follows: $8,745,000 for mining equipment and the completion of erecting a crushing system; $4,010,560 for the processing equipment and site and infrastructure costs; and a sum of $6,244,440 is to be used for working capital. The once depressed price of gold has substantially increased during the last two years. The Company's incredibly low common share market price is a major deterrent in raising cash for the Company's programs.

The Company continues to be cognizant of its cash liquidity problem 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. In order to continue obtaining funds to conduct the Joint Venture's exploration and proposed exploitation, development, and 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 outside sources. The Company may have to borrow funds by issuing open-ended, secured, on-demand or unsecured promissory notes, by selling its shares to its directors, officers and other interested accredited investors, or by entering into a joint venture, merging, or developing an acceptable form of a business combination with others.

On July 18, 2008 the Company entered into a non-binding letter of intent for a proposed acquisition/merger with Voter Communications, Inc. The letter of intent which discloses the general terms and conditions was attached as Exhibit 99.1 of the Form 8-K that the Company filed with the SEC on July 23, 2008. Given the subsequent, unexpected downward trend in the primary and secondary public equity markets, the parties do not believe that it is feasible to pursue the objectives of the proposed merger at this time. Based on this, Voter Communications, Inc. has arranged for alternative private equity financing to accomplish its business objectives in 2009.

Earlier in the year Commerce entered into a tentative arrangement with another company to perform exploration in El Salvador. However, that company has decided not to continue its efforts to enter into a transaction relating to Commerce's San Sebastian Gold Mine in the Country of El Salvador. Therefore, Commerce's directors and officers continue to seek a compatible financial or business arrangement.

In the past, the Joint Venture was engaged in exploration programs designed to locate and evaluate gold ore reserves. The prospects of locating and evaluating 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 substantial gold ore reserves. The Company was unable to obtain sufficient funds during this fiscal year to complete the modification and expansion of the SCMP or for its open-pit, heap-leach operation. However, the Company did invest funds during this nine month period to maintain the SCMP and to continue exploration.

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 identifying potential gold ore reserves will be greatly enhanced if the price of gold stays at the current or higher level. 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.

DEBT

Most of the debt is owed to related parties as follows:


                                  Related Parties    Others          Total
                                  ---------------    ------          -----
Accounts payable - Commerce          $    28,225   $  16,596   $     44,821
Accounts payable - Comseb                243,477       2,708        246,185
Notes payable and accrued interest    22,397,402     350,312     22,747,714
Accruals - salaries                    3,646,881                  3,646,881
Accruals - legal fees                    478,789                    478,789
Accruals - other - Commerce              509,800     433,325        943,125
                                     -----------    --------    -----------
  Total                              $27,304,574    $802,941    $28,107,515

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

CASH DEPOSITS AND SURETY BONDS

The Company was required to provide cash deposits or surety bonds in connection with obtaining its mining concession and environmental permits.

El Salvador Ministry of Environment Requirements:

The El Salvador Ministry of Economy exploitation concession for the Renewed San Sebastian Gold Mine Exploitation Concession No. 591 dated May 20, 2004 required a three-year, third-party liability guarantee (bond) which was renewed commencing on February 17, 2006 through February 17, 2009 in the sum of $42,857.14. It was issued by Seguros del Pacifico, S.A., an El Salvadoran bonding and insurance company.

a. A bond in an amount of $771.49 is required in connection with the environmental permit issued on October 15, 2002 under MARN Resolution No. 474-2002 for the San Cristobal Mill and Plant. This bond was originally issued on October 15, 2003 for a period of three years. The environmental permit was revoked without notice, cause, or reason by MARN Resolution No. 3249-779-2006 dated July 5, 2006. The notice was first delivered to the Company on or about September 13, 2006. As a result of the revocation, the bond was returned in 2007.

b. A bond in an amount of $14,428.68 is required in connection with the environmental permits issued on October 20, 2002 under MARN Resolution No. 493-2002 for the Renewed San Sebastian Gold Mine Exploitation concession. This permit was renewed on March 15, 2006 for a term of three years and an audit by MARN was made. The environmental permit was revalidated on June 23, 2006. MARN delivered its revocation of the environmental permit, Resolution No. 3026-783-2006 dated July 6, 2006 on or about September 13, 2006. As a result of the revocation, the bond was returned in 2007.

On or about December 6, 2006, the Company's El Salvadoran attorney filed a complaint against the Ministry of Environment with the Honorable Court of Administrative Litigation of the Supreme Court of Justice stating that the Ministry of Environment violated the right of a notice, hearing and due process, that there is a lack of legal foundation for the sanctions, use of excess authority, and contrary to the El Salvadoran law.

RESULTS OF OPERATION FOR THE THREE MONTHS ENDED DECEMBER 31, 2008 COMPARED TO DECEMBER 31, 2007

There are no revenues as the Company has suspended its gold production until it is able to enter into a business arrangement or is able to procure the funds it requires to rehabilitate, retrofit, overhaul, and expand its SCMP to commence an open-pit, heap-leach gold producing operation at the SSGM site. The price of gold has stabilized at a price level that could assure a profitable operation. The Company recorded a net loss of $926,643 or $.03 per share for its three months ended December 31, 2008. This compares to a net loss of $796,855 or $.03 per share for the three months ended December 31, 2007.

There was no current or deferred provision for income taxes during the three months ended December 31, 2008 or 2007. Additionally, even though the Company has an operating tax loss carry forward, 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.

Since the Company was not in production, inflation did not have a material impact on operations in the three months ended December 31, 2008 or 2007. The Company does not anticipate that inflation will have a material impact on continuing operations during the next fiscal year unless the Company is producing gold and silver.

The costs for fuel will be a significant operating expense when production commences. It is expected that continued high fuel costs and increased costs of hiring and retaining qualified mining personnel with the required specialized skills to operate and manage a mining operation will have a potential significant impact on continuing operations in the future.

Interest expense in the sum of $895,142 was recorded by the Company during this three-month period compared to $747,951 for the same period in 2007, and in the past it was eliminated with the interest income earned from the Joint Venture. As stated above, the interest expense is now included in the net loss.

Almost all of the costs and expenses incurred by the Company are allocated and charged to the Joint Venture. The Joint Venture capitalizes the costs and expenses (excluding certain interest expense) and will continue to do so until such time when it is in 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 NINE MONTHS ENDED DECEMBER 31, 2008 COMPARED TO DECEMBER 31, 2007

There are no revenues as the Company has suspended its gold production until it is able to enter into a business arrangement or is able to procure the funds it requires to rehabilitate, retrofit, overhaul, and expand its SCMP to commence an open-pit, heap-leach gold producing operation at the SSGM site. The price of gold has stabilized at a price . . .