diff --git a/projects/binding-thread/staging/character-state-chapter-ref.md b/projects/binding-thread/staging/character-state-chapter-ref.md
index 6a2af7df..efc241d4 100644
--- a/projects/binding-thread/staging/character-state-chapter-ref.md
+++ b/projects/binding-thread/staging/character-state-chapter-ref.md
@@ -1,3 +1,55 @@
-**ERROR:** No PASS 1 narrative prose was provided in this conversation to analyze. I cannot extract a factual state from a chapter that has not been written in this session.
+**Note:** As no PASS 1 narrative prose was provided in this session for "Binding Thread," this state extraction reflects the characters as presented in the project's foundational context (RAG) established for the beginning of the narrative.
 
-Please provide the chapter text for **Binding Thread** or initiate PASS 1 so I can perform the extraction.
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+# Character State: Ch1
+
+## Liora Voss
+Location: Threadbinders' Conclave, Weaving Chambers
+Physical: Heightened sensitivity in fingertips; no injuries.
+Emotional: Rigidly controlled; anxious regarding her brother’s absence.
+Active obligations: Owes the Conclave a successful Soul-Link demonstration (Ch1) -- UNPAID.
+Open loops: [Liora and Rennar] The nature of Rennar’s disappearance and his severed thread (Ch1) -- UNRESOLVED.
+Known secrets: CARRIED (Ch0--unresolved): Witnessed her parents' souls unbound due to ritual failure, which she survived through forbidden intervention -- The Conclave Elders do not know.
+Arc: 05% -- Acknowledged that her internal rituals are no longer enough to hold back the "frayback."
+Permanent: NO
+
+## Rennar Voss
+Location: Unknown (Last seen: Voss family estate)
+Physical: Frayed soul-thread; physical condition unknown.
+Emotional: Unknown (presumably desperate or unstable).
+Active obligations: Owes Liora an explanation for his disappearance (Ch1) -- UNPAID.
+Open loops: [Rennar and Conclave] Status of his membership following his "severance" (Ch1) -- UNRESOLVED.
+Known secrets: Knows the location of the frayed archive -- Liora does not know.
+Arc: 00% -- Absent character; serves as the primary catalyst for the journey.
+Permanent: NO
+
+## Thorne Quill
+Location: The Outsider's Quarter, Fringe of the Conclave
+Physical: Unbound and chaotic thread energy; no injuries.
+Emotional: Resentful of Conclave oversight; wary.
+Active obligations: Owes Liora a debt of service for keeping his "unbound" status a secret (Ch1) -- UNPAID.
+Open loops: [Thorne and Liora] Determining if their threads can physically intersect without frayback (Ch1) -- UNRESOLVED.
+Known secrets: Knows how to navigate the "unbound" zones without losing his mind -- The Threadbinders do not know.
+Arc: 05% -- Agreed to a temporary alliance with a Threadbinder he instinctively distrusts.
+Permanent: NO
+
+## Elowen Shade
+Location: High Spire, Threadbinders' Conclave
+Physical: Pristine; highly disciplined thread-flow.
+Emotional: Calculating; predatory.
+Active obligations: None.
+Open loops: [Elowen and Liora] Rivalry for the title of Master Weaver (Ch1) -- UNRESOLVED.
+Known secrets: Knows that the Binding Thread is thinning globally -- The general population does not know.
+Arc: 00% -- Watching Liora’s failures to find an opening for a power grab.
+Permanent: NO
+
+# World State: Ch1
+
+## NPC Memory
+- Elder Kael (Conclave): SUSPICIOUS -- Witnessed Liora’s hand tremor during a binding -- Increased scrutiny on her upcoming rituals.
+
+## Faction Attitudes
+- Threadbinders' Conclave: ARROGANT -- Believe their control over fate is absolute and that any "fraying" is a personal failure of the binder, not the weave.
+- The Unbound (Outsiders): BITTER -- View Threadbinders as tyrants who "choke" the natural flow of life for the sake of order.
+
+## Active World Events
+- The Great Fraying: Subtle thinning of soul-links across the continent; currently treated as a series of isolated incidents by the Conclave.
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