Preheat oven to 325 degrees.Spread coconut on a cookie sheet and bake for 3 minutes.Remove from oven, stir, then cook again for 3 minutes or until coconut is lightly browned.Using a double boiler, bring water to a boil, then turn down to simmer.Add ½ a bag of Lily's Chocolate Chips and butter in a double boiler and stir until completely melted.Add toasted coconut to melted chocolate.