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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 (MARK ONE)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
  OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
 
  
 Coconut Palm Acquisition Corp.
 (Exact Name of Registrant as Specified in its Charter)
 Delaware
(State or Other Jurisdiction of Incorporation or Organization)
    
    20-2763411
(I.R.S. Employer Identification No.)595 South Federal Highway, Suite 500
Boca Raton, Florida
(Address of Principal Executive Offices)
    
    33432
(Zip Code)
 Registrants telephone number, including area code (561) 955-7300
  x o
  o o x
 x o




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COCONUT PALM ACQUISITION CORP.
 INDEX
 PagePart IFinancial InformationItem 1. Financial StatementsCondensed Balance Sheets  As of September 30, 2006 (unaudited) and As of December 31, 2005
    
    
    3Condensed Statements of Operations (unaudited)  Three Months Ended September 30, 2006, Three Months Ended September 30, 2005, Nine Months Ended September 30, 2006, From April 29, 2005 (date of inception) to September 30, 2005 and From April 29, 2005 (date of inception) to September 30, 2006
    
    
    4Condensed
Statement of Changes in Common Stockholders Equity   From April 29, 2005 (date of inception) through December 31, 2005 and (unaudited) for the nine months ended September 30, 2006
    
    
    5Condensed Statements of Cash Flows (unaudited)  Nine Months Ended September 30, 2006, From April 29, 2005 (date of inception) to September 30, 2005, and From April 29, 2005 (date of inception) to September 30, 2006
    
    
    6Notes to Condensed Unaudited Financial Statements
    
    
    7-12Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13-17Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    18Item 4. Controls and Procedures
    
    
    18Part IIOther InformationItem 1A. Risk Factors
    
    
    19Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    19Item 5. Other Information
    
    
    19Item 6. Exhibits
    
    
    20Signatures
    
    
    20Exhibit Index
    
    
    21CertificationsEX-31.1  Section 302 Certification of CEOEX-31.2  Section 302 Certification of CFOEX-32.1  Section 906 Certification of CEOEX-32.2  Section 906 Certification of CFO
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PART IFINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 COCONUT PALM ACQUISITION CORP.
(a development stage company)
 
 CONDENSED BALANCE SHEETS
 September 30, 2006(unaudited)
    
    December 31, 2005ASSETSCurrent assets:Cash and cash equivalents
    
    $
    319,606
    
    
    $
    934,086Prepaid expenses
    
    
    54,228
    
    
    
    14,999Total current assets
    
    
    373,834
    
    
    
    949,085Other assets:Investments held in trust fund
    
    
    64,630,034
    
    
    
    63,120,584Deferred acquisition costs
    
    
    1,617,759
    
    
    
    Total other assets
    
    
    66,247,793
    
    
    
    63,120,584Total assets
    
    $
    66,621,627
    
    
    $
    64,069,669LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    1,105,652
    
    
    $
    29,271Accrued expenses
    
    
    436,462
    
    
    
    46,306Accrued Delaware franchise fees
    
    
    21,617
    
    
    
    Income taxes payable
    
    
    81,522
    
    
    
    25,756Total current liabilities
    
    
    1,645,253
    
    
    
    101,333COMMITMENTS AND CONTINGENCIES (Note H)
    
    
    
    
    
    
    Common stock subject to possible conversion - 2,298,850 shares
    
    
    12,517,738
    
    
    
    12,517,738Interest attributable to common stock, subject to possible conversion
    
    
    401,806
    
    
    
    100,067STOCKHOLDERS EQUITYPreferred stock  $.0001 par value; 1,000,000 shares
authorized; 0 issued and outstanding
    
    
    
    
    
    
    Common stock  $.0001 par value; 50,000,000 shares
authorized; 14,000,000 issued and outstanding
(which includes 2,298,850 shares subject to possible conversion)
    
    
    1,400
    
    
    
    1,400Additional paid-in-capital
    
    
    51,114,006
    
    
    
    51,114,006Income accumulated during the development stage
    
    
    941,424
    
    
    
    235,125Total stockholders equity
    
    
    52,056,830
    
    
    
    51,350,531Total liabilities and stockholders equity
    
    $
    66,621,627
    
    
    $
    64,069,669
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COCONUT PALM ACQUISITION CORP.
(a development stage company)
 
 CONDENSED STATEMENTS OF OPERATIONS
 (UNAUDITED)
 April 29, 2005
    
    
    April 29, 2005Three months ended
    
    
    Three months ended
    
    
    Nine months ended
    
    
    (Date of Inception)
    
    
    (Date of Inception)September 30, 2006
    
    
    September 30, 2005
    
    
    September 30, 2006
    
    
    to September 30, 2005
    
    
    to September 30, 2006Operating costs
    
    $
    (127,119
    )
    
    $
    (10,178
    )
    
    $
    (433,510
    )
    
    $
    (10,254
    )
    
    $
    (580,433
    )Other income:Bank interest
    
    
    3,131
    
    
    
    
    
    
    
    14,307
    
    
    
    
    
    
    
    21,594Interest on investments held in Trust Fund
    
    
    535,962
    
    
    
    75,262
    
    
    
    1,509,451
    
    
    
    75,262
    
    
    
    2,010,035Total other income
    
    
    539,093
    
    
    
    75,262
    
    
    
    1,523,758
    
    
    
    75,262
    
    
    
    2,031,629Income before provision
for income taxes
    
    
    411,974
    
    
    
    65,084
    
    
    
    1,090,248
    
    
    
    65,008
    
    
    
    1,451,196Provision for income taxes  current
    
    
    (29,649
    )
    
    
    (3,037
    )
    
    
    (82,210
    )
    
    
    (3,037
    )
    
    
    (107,966
    )Net income
    
    $
    382,325
    
    
    $
    62,047
    
    
    $
    1,008,038
    
    
    $
    61,971
    
    
    $
    1,343,230Interest income attributable to common stock
subject to possible conversion
    
    
    (107,139
    )
    
    
    (15,045
    )
    
    
    (301,739
    )
    
    
    (15,045
    )
    
    
    (401,806
    )Net income allocable to common stockholders not
subject to possible conversion
    
    $
    275,186
    
    
    $
    47,002
    
    
    $
    706,299
    
    
    $
    46,926
    
    
    $
    941,424Weighted average number of shares outstanding:Basic
    
    
    14,000,000
    
    
    
    4,543,478
    
    
    
    14,000,000
    
    
    
    3,712,903Diluted
    
    
    15,582,831
    
    
    
    4,752,867
    
    
    
    15,803,173
    
    
    
    3,837,186Net income per share:Basic
    
    $
    0.03
    
    
    $
    0.01
    
    
    $
    0.07
    
    
    $
    0.02Diluted
    
    $
    0.02
    
    
    $
    0.01
    
    
    $
    0.06
    
    
    $
    0.02Weighted average number of shares outstanding exclusive
of shares subject to possible conversion:Basic
    
    
    11,701,150
    
    
    
    4,134,987
    
    
    
    11,701,150
    
    
    
    3,470,444Diluted
    
    
    13,283,981
    
    
    
    4,344,376
    
    
    
    13,504,323
    
    
    
    3,594,726Net income per share not subject to possible conversion:Basic
    
    $
    0.02
    
    
    $
    0.01
    
    
    $
    0.06
    
    
    $
    0.01Diluted
    
    $
    0.02
    
    
    $
    0.01
    
    
    $
    0.05
    
    
    $
    0.01
  4




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COCONUT PALM ACQUISITION CORP.
(a development stage company)
 
 CONDENSED
STATEMENT OF CHANGES IN COMMON STOCKHOLDERS EQUITY
  IncomeCommon Stock
    
    
    Paid-in Capital
    
    
    Accumulatedin
    
    
    During theShares
    
    
    Amount
    
    
    Excess of Par
    
    
    Development Stage
    
    
    TotalBalance   April 29,
2005 (date of inception)Initial capitalization from founding
stockholder
    
    
    2,500,000
    
    
    $
    250
    
    
    $
    24,750
    
    
    $
    
    
    
    $
    25,000Sale of 11,500,000 units net of
underwriters
discount and offering expenses (includes
2,298,850 shares subject to possible
conversion)
    
    
    11,500,000
    
    
    
    1,150
    
    
    
    63,606,894
    
    
    
    
    
    
    
    63,608,044Proceeds subject to possible conversion of
2,298,850 shares
    
    
    
    
    
    
    
    
    
    
    (12,517,738
    )
    
    
    
    
    
    
    (12,517,738
    )Accretion of trust fund relating to common
stock subject to possible conversion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (100,067
    )
    
    
    (100,067
    )Proceeds from issuance of option
    
    
    
    
    
    
    
    
    
    
    100
    
    
    
    
    
    
    
    100Net income for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    335,192
    
    
    
    335,192Balance at December 31, 2005
    
    
    14,000,000
    
    
    $
    1,400
    
    
    $
    51,114,006
    
    
    $
    235,125
    
    
    $
    51,350,531Accretion of trust fund relating to common
stock subject to possible conversion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (301,739
    )
    
    
    (301,739
    )Net income for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,008,038
    
    
    
    1,008,038Balance at September 30, 2006 (unaudited)
    
    
    14,000,000
    
    
    $
    1,400
    
    
    $
    51,114,006
    
    
    $
    941,424
    
    
    $
    52,056,830
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COCONUT PALM ACQUISITION CORP.
(a development stage company)
 
 CONDENSED STATEMENTS OF CASH FLOWS
 (UNAUDITED)
 April 29, 2005
    
    April 29, 2005Nine months ended
    
    (Date of Inception)
    
    (Date of Inception)September 30, 2006
    

to September 30, 2005
    
    to September 30, 2006Cash flows from operating activities:Net income
    
    $
    1,008,038
    
    
    $
    61,971
    
    
    $
    1,343,230Increase (decrease) in cash attributable to changes in:Prepaid expenses
    
    
    (39,229
    )
    
    
    (34,002
    )
    
    
    (54,228
    )Accounts payable
    
    
    82,677
    
    
    
    174,941
    
    
    
    111,948Accrued expenses
    
    
    (36,705
    )
    
    
    1,500
    
    
    
    9,601Accrued franchise fees
    
    
    21,617
    
    
    
    
    
    
    
    21,617Income tax payable
    
    
    55,766
    
    
    
    3,037
    
    
    
    81,522Net cash provided by operating activities
    
    
    1,092,164
    
    
    
    207,447
    
    
    
    1,513,690Cash flows from investing activities:Principal deposited into Trust Fund
    
    
    
    
    
    
    (62,620,000
    )
    
    
    (62,620,000
    )Increase in investments in a fund
    
    
    (1,509,450
    )
    
    
    (75,262
    )
    
    
    (2,010,034
    )Deferred acquisition costs
    
    
    (197,194
    )
    
    
    
    
    
    
    (197,194
    )Net cash used in investing activities
    
    
    (1,706,644
    )
    
    
    (62,695,262
    )
    
    
    (64,827,228
    )Cash flows from financing activities:Proceeds from sale of common stock, net of offering costs
    
    
    
    
    
    
    63,633,044
    
    
    
    63,633,044Proceeds from notes payable to founding stockholders
    
    
    
    
    
    
    75,000
    
    
    
    75,000Repayment of notes payable to founding stockholders
    
    
    
    
    
    
    
    
    
    
    (75,000
    )Proceeds from issuance of underwriters purchase option
    
    
    
    
    
    
    100
    
    
    
    100Net cash provided by financing activities
    
    
    
    
    
    
    63,708,144
    
    
    
    63,633,144Net (decrease) increase in cash and cash equivalents
    
    
    (614,480
    )
    
    
    1,220,329
    
    
    
    319,606Cash and cash equivalents   beginning of period
    
    
    934,086
    
    
    
    
    
    
    
    Cash and cash equivalents   end of period
    
    $
    319,606
    
    
    $
    1,220,329
    
    
    $
    319,606Supplemental cash flow information:Income taxes paid
    
    $
    46,769
    
    
    $
    
    
    
    $
    42,869Supplemental non-cash activity:Accretion of Trust Fund income relating to common stock
subject to possible conversion
    
    $
    301,739
    
    
    $
    15,045
    
    
    $
    401,806Accrual of deferred acquisition costs
    
    $
    1,420,565
    
    
    
    
    
    
    $
    1,420,565
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COCONUT PALM ACQUISITION CORP.
 
 NOTES TO CONDENSED UNAUDTED FINANCIAL STATEMENTS
  Basis of Presentation
        7




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[1] Cash and cash equivalents:
 [2] Fair value of financial instruments:
 [3] Earnings per common share:
 8




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[4] Use of estimates:
 [5] Income taxes:
 [6] New Accounting Pronouncement:
    9




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Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2006
    
    
    September 30, 2006Current tax provisionFederal
    
    $
    
    
    
    $
    State
    
    
    ( 29,649
    )
    
    
    ( 82,210
    )Total current tax provision
    
    $
    (29,649
    )
    
    $
    (82,210
    )Deferred income tax provision (benefit)Federal
    
    $
    
    
    
    $
    State
    
    
    
    
    
    
    Total deferred tax provision
    
    
    
    
    
    
    Total provision for taxes
    
    $
    (29,649
    )
    
    $
    (82,210
    )
  September 30,
    
    
    December 31,2006
    
    
    2005Total current deferred tax assets
    
    $
    
    
    
    $
    Net operating losses
    
    $
    27,776
    
    
    $
    11,305Startup costs
    
    
    218,795
    
    
    
    43,471Total non-current deferred tax assets
    
    $
    246,571
    
    
    $
    54,776Valuation allowance
    
    
    (246,571
    )
    
    
    (54,776
    )Net deferred tax assets
    
    $
    
    
    
    $
    
      10




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12




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
     Developments in Finding Suitable Business Combination Partner
   13




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Results of Operations for the period from July 1, 2006 through September 30, 2006
  Results of Operations for the period from January 1, 2006 through September 30, 2006
  Liquidity and Capital Resources
   15




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Off-Balance Sheet Arrangements
  16




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Risk Factors That May Affect Future Results
  17




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4. CONTROLS AND PROCEDURES
   18




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PART IIOTHER INFORMATION
 
 ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
     
 ITEM 5. OTHER INFORMATION
  19




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ITEM 6. EXHIBITS
  2.3
    
    Second Amendment to Agreement and Plan of Merger, by and among Coconut Palm Acquisition
Corp., Equity Broadcasting Corporation and certain shareholders of Equity Broadcasting
Corporation, dated September 20, 2006 (incorporated by reference to the Companys Form 8-K
filed on September 20, 2006)4.6
    
    Warrant Clarification Agreement, dated August 17, 2006, between
Coconut Palm Acquisition Corp. and Continental Stock Transfer & Trust
Company (incorporated by reference to the Companys Form 10-Q for the
Quarter Ended June 30, 2006 filed on August 18, 2006)31.1
    
    Certification of Chief Executive Officer Pursuant to Rule 15A-14(A)
or 15D-14(A) of the Securities Exchange Act of 1934, As Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer Pursuant to Rule 15A-14(A)
or 15D-14(A) of the Securities Exchange Act of 1934, As Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification of Chief Executive Officer Pursuant to Rule 13a-14(b)
or Rule 15d-14(b) and 18 U.S.C. Section 1350, As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification of Chief Financial Officer Pursuant to Rule 13a-14(b)
or Rule 15d-14(b) and 18 U.S.C. Section 1350, As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
 
 SIGNATURES
  COCONUT PALM ACQUISITION CORP.Date: November 13, 2006
    By:
    /s/ Richard C. RochonChairman of the Board and Chief Executive Officer(principal executive officer)Date: November 13, 2006
    By:
    /s/ Robert C. FarenhemVice President and Secretary(principal financial and accounting officer) 20




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Exhibit Index
 2.3
    
    Second Amendment to Agreement and Plan of Merger, by and among
Coconut Palm Acquisition Corp., Equity Broadcasting Corporation and
certain shareholders of Equity Broadcasting Corporation, dated
September 20, 2006 (incorporated by reference to the Companys Form
8-K filed on September 20, 2006)4.6
    
    Warrant Clarification Agreement, dated August 17, 2006, between
Coconut Palm Acquisition Corp. and Continental Stock Transfer & Trust
Company (incorporated by reference to the Companys Form 10-Q for the
Quarter Ended June 30, 2006 filed on August 18, 2006)31.1
    
    Certification of Chief Executive Officer Pursuant to Rule 15A-14(A)
or 15D-14(A) of the Securities Exchange Act of 1934, As Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer Pursuant to Rule 15A-14(A)
or 15D-14(A) of the Securities Exchange Act of 1934, As Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification of Chief Executive Officer Pursuant to Rule 13a-14(b)
or Rule 15d-14(b) and 18 U.S.C. Section 1350, As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification of Chief Financial Officer Pursuant to Rule 13a-14(b)
or Rule 15d-14(b) and 18 U.S.C. Section 1350, As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
 21