You can argue, but you're still not able to capitalize your salaries expense.
From what little you've written, it sounds like you're still in the predevelopment or early development stages, correct? Under US GAAP, ASC 730-10-05-3 says, in part:
"Also, there is often a high degree of uncertainty about whether research and development expenditures will provide any future benefits. Thus, even an indirect cause and effect relationship can seldom be demonstrated. Because there is generally no direct or even indirect basis for relating costs to revenues, the principles of associating cause and effect and systematic and rational allocation cannot be applied to recognize research and development costs as expenses. That is, the notion of matching, when used to refer to the process of recognizing costs as expenses on any sort of cause and effect basis, cannot be applied to research and development costs. The general lack of discernible future benefits at the time the costs are incurred indicates that the immediate recognition principle of expense recognition should apply." (bolding mine)
And if you look in ASC 730-10-55-1(h)-(j), it sounds like "predevelopment activities" are R&D costs that would be expensed as incurred under ASC 730-10-05-3:
"The following activities typically would be considered research and development within the scope of this Topic (unless conducted for others under a contractual arrangement—see paragraph 730-10-15-4[a]):
h. Design, construction, and operation of a pilot plant that is not of a scale economically feasible to the entity for commercial production
i. Engineering activity required to advance the design of a product to the point that it meets specific functional and economic requirements and is ready for manufacture
j. Design and development of tools used to facilitate research and development or components of a product or process that are undergoing research and development activities.
You really don't have any leg to stand on here. This issue comes up with virtually every startup looking to develop something--everybody wants to capitalize salaries before they have a feasible product. That's why FASB put this section in the US GAAP standards.
Expense the salaries, or know that your auditor will likely modify their opinion. And that modification will likely be an adverse opinion.
