This paper focuses on description of the operation principle inherent to the Adams' electric motor-generator fitted with permanent magnets made of rare earth (NdFeB). For checking of the basic design we have used the FEM electromagnetic simulation made by Ansys Workbench and Ansys Maxwell. The Adams' motor generator is basically assembled with slight deviations from the original patent with respect to the stator magnetic circuit design. The resultant speed-torque characteristics obtained by measurement and the input power values have been processed to determine the machine's efficiency.