Am I a cofounder and how many equity shares should I take?

If you're unpaid, then the only thing you can do is get equity or some sort of right to equity, like options.

So, then, the problem is one of getting equity to people in proportion to their contributions. Right now, this engineer has done 100% of the work and (presumably) provided 100% of the financing, so should get 100% of the initial equity. But, over time, that will change.

The common thing in cases like yours is to award a set number of shares to the engineer without vesting -- he's already earned them. And then, award** a set number of shares to both you and the engineer, with vesting. So, as you work, you get the right to keep more and more of those shares.

For later entrants, the same sort of arrangement is stilll common. However, as time goes by, the value of the company shares will probably go up. If you just award shares to those late entrants, they'll have to pay taxes on them. And, if those later entrants buy shares, they'll actually have to invest real money into them. So, it often makes sense to award stock options or stock appreciation rights to those later entrants.

This advice is really generic though -- these are decisions you should talk over with your attorney, after providing a lot more information about your situation.

[**Note: when 'awarding' shares, there are two options: (1) just give the shares, or (2) allow them to buy shares at current fair-market-value. Those two have different tax consequences.]

If this person has built a product that matches a market and all you do is handle the marketing for this group, I don't think you are a cofounder. That doesn't mean you shouldn't get stock (since you're not getting paid), but what have you created? You're almost like a commissioned sales person at this point.

However, you need to identify what you could do to deserve being a cofounder. If you identify a new market or drastically suggest changes to the application to address the current market, you should get credit for that. You need to work this out in the contract if you are not satisfied with the the amount of stock you get at first. And since you are taking that risk (not getting a high percentage right away, but soon could deserve more)k you could end up with more stock in the long run.

Right now, it just remains to be seen what it is you have to offer beyond just being an independent marketing person getting some sweat equity.