The above research and development includes CMG's share of joint research and development costs associated with the DRMS project of $1.0 million and $2.8 million for the three and nine months ended December 31, 2012, respectively, (2011 - $0.9 million and $2.3 million). See discussion under "Commitments, Off Balance Sheet Items and Transactions with Related Parties."
The increases of 16% and 21% in our gross spending on research and development for the three and nine months ended December 31, 2012, respectively, demonstrate our continued commitment to advancement of our technology which is the focal part of our business strategy. Research and development costs, net of research and experimental development ("SR&ED") credits, increased by 14% and 19% during the three and nine months ended December 31, 2012, respectively, compared to the same periods of the previous fiscal year, due to increased employee compensation costs, investment in computing resources and facilities costs associated with the newly leased office space.
At the same time, we had an increase in SR&ED credits driven mainly by the increases in our direct employee costs as well as the increase in the eligibility of our expenses for SR&ED credits.
DEPRECIATIONFor the three months ended December 31, 2012 2011 $ change % change($ thousands)--------------------------------------------------------------------------------------------------------------------------------------------------------Depreciation of property and equipment, allocated to: Sales, marketing and professional services 124 118 6 5% Research and development 235 145 90 62% General and administrative 52 58 (6) -10%----------------------------------------------------------------------------Total depreciation 411 321 90 28%--------------------------------------------------------------------------------------------------------------------------------------------------------For the nine months ended December 31, 2012 2011 $ change % change($ thousands)--------------------------------------------------------------------------------------------------------------------------------------------------------Depreciation of property and equipment, allocated to: Sales, marketing and professional services 341 305 36 12% Research and development 641 383 258 67% General and administrative 140 189 (49) -26%----------------------------------------------------------------------------Total depreciation 1,122 877 245 28%--------------------------------------------------------------------------------------------------------------------------------------------------------
The quarterly and year-to-date increases in depreciation, compared to the same periods of the previous fiscal year, reflect the increase in our asset base, mainly as a result of increased spending on computing resources and expansion of the office space in the third quarter of the previous fiscal year, and a minor office space addition in the second quarter of the current fiscal year.
Finance Income and CostsFor the three months ended December 31, 2012 2011 $ change % change($ thousands)--------------------------------------------------------------------------------------------------------------------------------------------------------Interest income 133 123 10 8%Net foreign exchange gain 147 - 147 -----------------------------------------------------------------------------Total finance income 280 123 157 128%--------------------------------------------------------------------------------------------------------------------------------------------------------Total finance costs (represented by net foreign exchange loss) - (32) 32 -100%--------------------------------------------------------------------------------------------------------------------------------------------------------For the nine months ended December 31, 2012 2011 $ change % change($ thousands)--------------------------------------------------------------------------------------------------------------------------------------------------------Interest income 409 341 68 20%Net foreign exchange gain 13 768 (755) -98%----------------------------------------------------------------------------Total finance income 422 1,109 (687) -62%--------------------------------------------------------------------------------------------------------------------------------------------------------Total finance costs (represented by net foreign exchange loss) - - - ---------------------------------------------------------------------------------------------------------------------------------------------------------
