2012 was a year of ups and downs for Vringo (NASDAQ:VRNG). The mobile entertainment company's stock price hit an all-time high, but the thrill of victory may have been soured slightly by patent suits with AOL and Google. Now, with rumors that billionaire Marc Cuban has raised his Vringo stake, now may be the perfect time to start paying attention to this company. Let's take a closer look at the nitty-gritty details and see if Vringo is a diamond in the rough.

Just the financials, ma'am
Vringo has impressively increased its annual revenue more than 34 times over from 2009 to 2012. However, judging from the income statement, Vringo hasn't been able to retain any of its earnings. After making $718,000 in 2011, Vringo's income was immediately swallowed up by research and development, as well as selling, general, and administrative costs, which totaled to over $6 million. Vringo has suffered negative net earnings for the past three years, and the devastation has put its cash flow statements, as well as its balance sheet, firmly in the red.

Social networking
Despite dismal financials, Vringo has made some great networking decisions. Through its Facetones application, which lets users put their Facebook (NASDAQ:FB) friends' faces in automated video slideshows, the company has been able to forge a business relationships with a dominating force in social media.

Vringo has also garnered attention from an impressive market mover-and-shaker. In early February 2013, Dallas Mavericks owner Mark Cuban raised his holdings from 1.03 million shares to 1.13 million. 

Facebook offers a platform for Vringo to reach an enormous base of potential customers. However, Vringo's relationship may also lead to the company exclusively relying on Mark Zuckerberg's brainchild, and as history has shown us with fellow coattail-clinger Zynga, this could end up turning toxic for Vringo. Still, it never hurts to get a leg up from a website with 1 billion users.

Vring-a-ding... dud?
Right now, Vringo is a cheap stock that is certainly turning some heads. However, the amount of red on the books suggests that Vringo's financial structure is much more flimsy than its shiny, attention-grabbing surface. Like a car with a bad skeleton, this company needs to get its dents thoroughly worked out before it can be considered a good investment. Make sure to take a good look under the hood before taking the plunge with this one.

Fool contributor Caroline Bennett has no position in any stocks mentioned. The Motley Fool recommends Facebook. The Motley Fool owns shares of Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.