Agreed. Im just trying to make myself clear that there is problem, not taking it as a legal advice. Mostly looking out for other options or better be aware etc.,
That's exactly my point. You need a lawyer to tell you if there's no problem, a small problem, or a large problem. The armchair lawyers on HN may give you confident-sounding answers, but the advice won't be sound enough to build a business on.
Consulting a lawyer about this should cost you less than $500. You can usually find startup lawyers who will work for equity (or just the promise of future business) if cash is that tight.