Let them know that they misrepresented their requirements in their request for bids, and halt further work until they renegotiate the contract at an hourly rate

Let them know that they misrepresented their requirements in their request for bids, and halt further work until they renegotiate the contract at an hourly rate. If the 50% milestone is the GUI, make sure your GUI satisfies the requirements they set forth at the beginning, not the moving goalpost they've tried to impose on you. In the future, save flat-fee contracts for situations where all the details are spelled out before you begin work. Letting the customer exercise discretion over details ramps up hours tenfold.