Preheat your oven to 350°F (175°C).

Grease and line an 8-inch round cake pan or a 9x9-inch square pan with parchment paper.

In a large bowl, whisk together the flour, sugar, baking powder, baking soda, and salt.

In another bowl, mix the applesauce, coconut milk, melted coconut oil, vanilla extract, and coconut extract (if using).

Add the wet ingredients to the dry ingredients, stirring until just combined.

Fold in the shredded coconut.

Pour the batter into the prepared pan and spread it evenly.

Bake for 35-40 minutes, or until a toothpick inserted into the center comes out clean and the top is golden.

Allow the cake to cool in the pan for 10 minutes, then transfer to a wire rack to cool completely.

While the cake is baking, make the caramel sauce.

In a small saucepan, combine the light brown sugar, dairy-free butter, and coconut milk.

Heat over medium heat, stirring constantly, until the mixture comes to a boil.

Reduce heat and simmer for 2-3 minutes, stirring occasionally, until the caramel thickens slightly.

Remove from heat and stir in the vanilla extract and a pinch of salt.

Once the cake is completely cooled, place it on a serving plate.

Pour the warm coconut caramel sauce over the top, allowing it to drip down the sides.

Optionally, sprinkle with toasted shredded coconut or coconut flakes.

Serve with a dollop of dairy-free whipped cream or coconut whipped cream for extra indulgence.