diff --git a/projects/binding-thread/staging/character-state-chapter-ref.md b/projects/binding-thread/staging/character-state-chapter-ref.md
index 027897c4..2234ae84 100644
--- a/projects/binding-thread/staging/character-state-chapter-ref.md
+++ b/projects/binding-thread/staging/character-state-chapter-ref.md
@@ -1,5 +1,42 @@
-ERROR: NO CHAPTER PROSE DETECTED.
+# Character State: Ch1
 
-As an AI, I cannot extract state from a chapter that has not been written in this conversation. The prompt indicates that "Turn 2" was supposed to be the PASS 1 narrative prose, but no narrative prose was provided in the message history for me to analyze. 
+## Liora Voss
+Location: The Loom-Chamber, Thistle-and-Thread District, Oakhaven
+Physical: Exhausted, experiencing "frayback" (tremors in hands, vision blurring), no physical wounds.
+Emotional: Stoic yet internally frantic, obsessive about control.
+Active obligations: 
+- Owes Master Elian a mended tapestry of the Trade Treaty (Ch1) -- UNPAID.
+Open loops:
+- Liora vs. the fraying soul-threads of the city (Ch1) -- UNRESOLVED.
+- Liora and the mystery of the "Severed Shadow" sightings (Ch1) -- UNRESOLVED.
+Known secrets:
+- Knows her brother Rennar is not dead, but hiding in the Fringe -- Master Elian.
+- Knows the Conclave is harvesting excess vitality from the poor -- the general public.
+Arc: 05% -- Liora fails to fully stabilize a fraying connection for the first time, realizing her absolute control is an illusion.
+Permanent: NO
 
-Please provide the text of the chapter (PASS 1) so I can extract the Character and World State.
\ No newline at end of file
+## Master Elian
+Location: The Loom-Chamber, Oakhaven
+Physical: Elderly, stooped, coughs frequently. 
+Emotional: Disappointed, weary of Liora's rigidity.
+Active obligations: 
+- Owes Liora the location of the Fringe contact (Ch1) -- UNPAID.
+Open loops:
+- Elian’s secret meetings with the Unbound (Ch1) -- UNRESOLVED.
+Known secrets:
+- Knows the ritual that killed Liora’s parents was sabotaged, not an accident -- Liora.
+Arc: 00% -- Established as a mentor figure urging vulnerability.
+Permanent: NO
+
+# World State: Ch1
+
+## NPC Memory
+- Master Elian (Threadbinders' Conclave): DISAPPOINTED -- Liora used a Soul-Link to force a thread into place rather than letting it weave naturally -- He warned her that she will eventually snap her own thread.
+
+## Faction Attitudes
+- Threadbinders' Conclave: ARROGANT -- Believing they are the only ones capable of maintaining the social fabric of the city.
+- The Unbound (Fringe): REBELLIOUS -- Seeking to live without the "interference" of fate-weavers.
+
+## Active World Events
+- The Fraying: A spiritual decay in Oakhaven causing people's connections to others to wither spontaneously -- Ongoing.
+- The Grand Weaving Festival: An upcoming ritual meant to strengthen the city's bonds -- 3 days away.
\ No newline at end of file