On September 30, 2006, at 0830 eastern daylight time, a Robinson R44, N140JM, registered to a private owner, and operated by North State Aviation LLC, as a 14 Code of Federal Regulations (CFR) Part 91 personal flight, lost engine power and conducted a forced landing 5 miles off the coast of Beaufort, North Carolina. The helicopter received substantial damage. Visual meteorological conditions prevailed and no flight plan was filed. The commercial rated pilot and the two passengers reported no injuries. The flight originated from Craven County Regional Airport, New Bern, North Carolina on September 30, 2006, at 0800. The pilot stated he was off the coast of Beaufort, North Carolina, following a boat at 50 knots between 100 to 150 feet AGL when he heard a "loud pop. He immediately checked the engine instruments and all instruments were normal. Shortly thereafter the "Low Rotor Warning Light" illuminated and the low rpm audio horn sounded. The engine and rotor rpm began to decrease, the pilot increased the throttle, and there was no response. He lowered the collective pitch control and entered an autorotation to the water. Once the helicopter entered the water he "rolled the cyclic to stop the main rotor blades" and advised his passengers to "get out" of the helicopter as it began to sink. All personnel exited the helicopter unassisted and were picked up by a boater. Review of the helicopter logbooks revealed that the last annual inspection was conducted on January 5, 2006, at a recorded Hobbs time of 499.4 hours. The current Hobbs meter time indicated 706.1 hours. The helicopter had 206.7 hours since the last annual inspection. The helicopter was recovered to a salvage facility and examined on October 12, 2006. Examination of the airframe, and flight controls revealed no anomalies. The engine was partially dissembled. The cooling scroll shroud was removed and light rotational scoring of the interior surface of the scroll shroud was noted. Turning of the cooling scroll rotated the engine, and continuity of the crankshaft to the rear gears and to the valve train was observed. Compression and suction was attained on all six cylinders. The interior of all six cylinders was inspected with a bore scope and corrosion by-products were observed in all cylinders. Water was present in the aircraft fuel strainer, the hose from the strainer to the carburetor, and the carburetor float bowl. An undetermined amount of a liquid with the odor consistent with aviation gasoline was found in the fuel tank. The fuel strainer screen and the carburetor fuel inlet screen were partially covered with a white substance consistent with corrosion by-products. The carburetor throttle arm was in the full throttle position and the mixture control arm was in the full rich position. Examination of the spark plugs revealed that the electrodes were gray in color, and the electrodes wells of the lower spark plugs contained a white substance consistent with corrosion. The oil suction screen was removed and no metallic debris was found. The engine oil filter was examined and was free of debris. No evidence of pre-impact failure or malfunction of the engine was observed.