1327012--4/2/2007--Coconut_Palm_Acquisition

related topics

{interest, director, officer}

{capital, credit, financial}

{stock, price, share}

{investment, property, distribution}

{acquisition, growth, future}

{control, financial, internal}

{stock, price, operating}

{operation, natural, condition}

{financial, litigation, operation}

{cost, contract, operation}

{personnel, key, retain}

Because there are numerous companies with a business plan similar to ours seeking to effectuate a business combination, it may be more difficult for us to do so. If third parties bring claims against us, the proceeds held in trust could be reduced and the per-share liquidation price received by stockholders will be less than $5.6685 per share. We may issue shares of our capital stock or debt securities to complete a business combination, which would reduce the equity interest of our stockholders and likely cause a change in control of our ownership. Our ability to successfully effect a business combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may join us following a business combination. Our officers and directors will allocate their time to other businesses, thereby causing conflicts of interest in their allocation of time to our affairs. This conflict of interest could have a negative impact on our ability to consummate a business combination. Our officers, directors and their affiliates may become affiliated with entities engaged in business activities similar to ours and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented. All of our officers and directors indirectly own shares of our common stock which will not participate in liquidation distributions and, therefore, they may have a conflict of interest in determining whether a particular target business is appropriate for a business combination. If our common stock becomes subject to the SEC s penny stock rules, broker-dealers may experience difficulty in completing customer transactions and trading activity in our securities may be adversely affected. Initially, we will only be able to complete one business combination, which will cause us to be solely dependent on a single business and a limited number of products or services. The ability of our stockholders to exercise their conversion rights may not allow us to effectuate the most desirable business combination or optimize our capital structure. Because of our limited resources and the significant competition for business combination opportunities, we may not be able to consummate an attractive business combination. We may be unable to obtain additional financing, if required, to complete a business combination or to fund the operations and growth of the target business, which could compel us to restructure or abandon a particular business combination. Our existing stockholder controls a substantial interest in us and thus may influence certain actions requiring a stockholder vote. Our outstanding warrants and option may have an adverse effect on the market price of common stock and increase the difficulty of effecting a business combination. If our founding stockholder exercises its registration rights, it may have an adverse effect on the market price of our common stock and the existence of these rights may make it more difficult to effect a business combination. If we are deemed to be an investment company, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it more difficult for us to complete a business combination. We do not have any independent directors and will generally not have the benefit of independent directors examining our financial statements and the propriety of expenses incurred on our behalf and subject to reimbursement. Risks Related to our Business and Operations Following the Merger with EBC EBC has a history of losses and there can be no assurance that EBC will become or remain profitable or that losses will not continue to occur. The merger may contribute to a future ownership change which may negatively impact Coconut Palm s ability to utilize EBC s net operating loss deferred tax assets in the future. We incur and expect to continue to incur losses on newly acquired or built stations without an immediate return on our investment. The loss of the services of the new senior management team or a significant number of employees may negatively affect EBC s business. We depend on EBC s network affiliation relationship with Univision for maintaining EBC s existing business and expanding into new media markets. We expect the competition for and the prices of syndicated programming will continue to increase and we may not be able to acquire desired syndicated programming on acceptable terms or at all. Increasing competition in the broadcast television industry and its programming alternatives may adversely affect us. New technologies may have a material adverse effect on EBC s results of operations. The loss of major advertisers, a reduction in their advertising expenditures, a decrease in advertising rates or a change in economic conditions may materially harm EBC s business. EBC s revenues are affected by seasonal trends causing additional cash flow concerns during the slower seasons. Failure to observe governmental rules and regulations governing the granting, renewal, transfer and assignment of licenses and EBC s inability to conclusively anticipate timing and approval actions could negatively impact EBC s business. Changes in FCC regulations regarding media ownership limits have increased the uncertainty surrounding the competitive position of EBC stations in the markets it serves and may adversely affect its ability to buy new television stations or sell existing television stations. The restrictions on foreign ownership may limit foreign investment in EBC or in its ability to successfully sell its business. Failure to observe rules and policies regarding the content of programming may adversely affect EBC s business. Because EBC television stations rely on must carry rights to obtain cable carriage, new laws or regulations that eliminate or limit the scope of these rights or failures could significantly reduce its ability to obtain cable carriage and therefore reduce its revenues. EBC s use of local marketing agreements and joint sales agreements may result in uncertainty regarding scheduled programming and/or revenue from the sale of advertising. The industry-wide mandatory conversion to digital television has required us, and will continue to require us, to make significant capital expenditures without assurance that we will remain competitive with other developing technologies. If direct broadcast satellite companies do not carry the stations that we own and operate or provide services to, we could lose audience share and revenue. EBC s substantial indebtedness may negatively impact EBC s ability to implement EBC s business plan. As of September 30, 2006 Failure of EBC s internal control over financial reporting could harm our business and financial results. An existing lawsuit against EBC and the members of EBC s board of directors could distract EBC from their operational responsibilities. Some members of the proposed management team of combined company are also partners in Royal Palm, an affiliate of Coconut Palm, and will not devote all of their time to the combined company and may also have conflicts of interest with the combined company. We may not be able to grow our business through acquisitions. If third parties bring claims against us or if EBC has breached any of its representations, warranties or covenants set forth in the merger agreement, we may not be adequately indemnified for any losses arising therefrom. Risks Related to our merger with Equity Broadcasting Corporation, including a discussion of such risks as of prior to completion of the merger If 20% or more of the holders of Coconut Palm s common stock issued in its public offering decide to vote against the proposed acquisition, Coconut Palm may be forced to liquidate, stockholders may receive less than approximately $5.6685 per share and the warrants will expire worthless. The combined company s working capital could be reduced, and Coconut Palm stockholders could own less than 34% of the combined company s outstanding common stock, if Coconut Palm stockholders exercise their right to convert their shares into cash. A substantial number of the combined company s shares will become eligible for future resale in the public market after the merger which could result in dilution and an adverse effect on the market price of those shares. Coconut Palm s existing stockholders will incur immediate and substantial dilution of their ownership and voting interests upon completion of the merger. If the merger s benefits do not meet the expectations of financial or industry analysts, the market price of Coconut Palm s common stock may decline. If Coconut Palm is unable to list on the Nasdaq Global Market or other national securities exchange, then it may be difficult for its stockholders to sell their securities. The lack of diversification in the business of the combined company affects Coconut Palm s ability to mitigate the risks that it may face or to offset possible losses that it may incur as a result of competing in the television broadcasting industry. If you do not vote your shares at the Coconut Palm special meeting or give instructions to your broker to vote or abstain from voting you will not be eligible to convert your shares of Coconut Palm common stock into cash and receive a portion of the trust account upon consummation of the merger. Failure to complete the merger could negatively impact the market price of Coconut Palm s common stock and may make it more difficult for Coconut Palm to attract another acquisition candidate, resulting, ultimately, in the disbursement of the trust proceeds, causing investors to experience a loss of their investment. If Coconut Palm does not consummate the merger with EBC and it is unable to consummate any business combination by September 14, 2007, as applicable, and is forced to dissolve and liquidate, payments from the trust account to Coconut Palm s public stockholders may be delayed. Coconut Palm stockholders may be held liable for claims by third parties against it to the extent of distributions received by them. An effective registration statement may not be in place when a Coconut Palm stockholder desires to exercise warrants, which would preclude the Coconut Palm stockholder from being able to exercise his, her or its warrants and cause those warrants to be practically worthless. We may choose to redeem our outstanding warrants when a prospectus relating to the common stock issuable upon exercise of such warrants is not current and the warrants are not exercisable, which may result in warrant holders receiving much less than fair value for the warrants or no value at all. Risks Related to the Offering The first vote of EBC shareholders may be deemed an offer and sale of Coconut Palm securities in violation of Section 5 of the Securities Act, which could result in recission payments to EBC shareholders.

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1327012--4/2/2007--Coconut_Palm_Acquisition_Corp.