On March 29, 2007, about 0910 central daylight time, a Rotoway Executive 162F homebuilt helicopter, N494D, registered to Garanco, Inc., and operated by a certified flight instructor (CFI), collided with the ground during an autorotation landing following loss of engine power at the Foley Municipal Airport in Foley, Alabama. The instructional flight was operated under the provisions of 14 Code of Federal Regulations Part 91 with no flight plan filed. Visual meteorological conditions prevailed. The CFI and the student pilot report no injuries, and the helicopter was substantially damaged. The flight was originating at the time of the accident. According to the CFI, the purpose of the flight was for the student to practice approaches and departures. They used a parallel taxiway for takeoff. The student pilot was at the controls and began a normal takeoff. When they were about 250 feet above ground level (agl) on initial climb out the engine started backfiring and the helicopter began yawing left and right. The CFI immediately took the controls as the engine RPM started to decay. He entered an autorotation and reduced the engine RPM to reduce the yawing from the engine backfiring. At about 40 feet agl he flared the helicopter to stop the descent and slow the forward airspeed. He leveled the helicopter and they settled to the surface and were sliding forward when the front skids snagged the grass and the helicopter nosed over coming to rest on the right side. The CFI and student pilot escaped without injury. Examination of the helicopter by an FAA Inspector, found the helicopter resting on its right side with substantial damage to the main rotor blades, windscreen and the tail boom. Further examination of the engine found the engines No. 4 exhaust valve stuck in the valve guide with the rocker arm out of position.