PhD funding agency, and conflict of research and development
Just try to explain that you cannot spend all your time on software development. Consider having your advisor present during the meeting to support this.

Show them the software, and ask them what they think about it, how they would hypothetically further develop it, what tips they can give you. Try to change the discussion to a constructive conversation where they help you and you can exploit their expertise. People generally appreciate when you value their knowledge, and are often happy to help.