diff --git a/requirements.txt b/requirements.txt
new file mode 100644
index 0000000..60b7002
--- /dev/null
+++ b/requirements.txt
@@ -0,0 +1,20 @@
+# Lemontropia Suite Python Dependencies
+# Install with: pip install -r requirements.txt
+
+# Testing (Never-Break Rule #5)
+pytest>=7.0.0
+pytest-asyncio>=0.21.0
+
+# GUI Framework
+PyQt6>=6.4.0
+
+# OCR Engines
+paddleocr>=2.6.0
+pytesseract>=0.3.10
+
+# Async support
+aiofiles>=23.0.0
+
+# Development
+black>=23.0.0  # Code formatting
+mypy>=1.0.0    # Type checking
diff --git a/tests/__init__.py b/tests/__init__.py
new file mode 100644
index 0000000..dbcb2c9
--- /dev/null
+++ b/tests/__init__.py
@@ -0,0 +1,2 @@
+# Description: Tests module initialization
+# pytest discovers and runs all test files automatically
diff --git a/tests/test_core.py b/tests/test_core.py
new file mode 100644
index 0000000..cb6970a
--- /dev/null
+++ b/tests/test_core.py
@@ -0,0 +1,385 @@
+# Description: pytest suite for core module
+# Run with: pytest tests/ -v
+# Standards: Test each component before commit (Never-Break Rule #5)
+
+import pytest
+import tempfile
+import shutil
+from pathlib import Path
+from decimal import Decimal
+from datetime import datetime
+import asyncio
+import time
+
+# Import core modules
+import sys
+sys.path.insert(0, str(Path(__file__).parent.parent))
+
+from core.database import DatabaseManager
+from core.project_manager import ProjectManager, ProjectData, SessionData, LootEvent
+from core.log_watcher import LogWatcher, LogEvent, MockLogGenerator
+
+
+# ============================================================================
+# FIXTURES
+# ============================================================================
+
+@pytest.fixture
+def temp_db():
+    """Create temporary database for testing."""
+    temp_dir = tempfile.mkdtemp()
+    db_path = Path(temp_dir) / "test.db"
+    
+    db = DatabaseManager(db_path)
+    db.initialize()
+    
+    yield db
+    
+    db.close()
+    shutil.rmtree(temp_dir)
+
+
+@pytest.fixture
+def temp_project_manager(temp_db):
+    """Create ProjectManager with temp database."""
+    return ProjectManager(temp_db)
+
+
+@pytest.fixture
+def temp_log_dir():
+    """Create temporary directory for log files."""
+    temp_dir = Path(tempfile.mkdtemp())
+    yield temp_dir
+    shutil.rmtree(temp_dir)
+
+
+# ============================================================================
+# DATABASE TESTS
+# ============================================================================
+
+class TestDatabaseManager:
+    """Test DatabaseManager functionality."""
+    
+    def test_initialization(self, temp_db):
+        """Test database initialization creates schema."""
+        version = temp_db.get_schema_version()
+        assert version == 1, f"Expected schema version 1, got {version}"
+    
+    def test_connection_reuse(self, temp_db):
+        """Test connection is reused efficiently."""
+        conn1 = temp_db.get_connection()
+        conn2 = temp_db.get_connection()
+        assert conn1 is conn2, "Connection should be reused"
+    
+    def test_execute_with_params(self, temp_db):
+        """Test parameterized queries."""
+        temp_db.execute(
+            "INSERT INTO app_state (key, value) VALUES (?, ?)",
+            ("test_key", "test_value")
+        )
+        temp_db.commit()
+        
+        cursor = temp_db.execute(
+            "SELECT value FROM app_state WHERE key = ?",
+            ("test_key",)
+        )
+        result = cursor.fetchone()
+        assert result['value'] == "test_value"
+
+
+# ============================================================================
+# PROJECT MANAGER TESTS
+# ============================================================================
+
+class TestProjectManager:
+    """Test ProjectManager Data Principle implementation."""
+    
+    def test_create_project(self, temp_project_manager):
+        """Test project creation."""
+        pm = temp_project_manager
+        project = pm.create_project("Test Hunt", "hunt", {"weapon": "M2100"})
+        
+        assert project.id is not None
+        assert project.name == "Test Hunt"
+        assert project.type == "hunt"
+        assert project.status == "active"
+    
+    def test_load_project(self, temp_project_manager):
+        """Test loading existing project."""
+        pm = temp_project_manager
+        created = pm.create_project("Load Test", "mine")
+        loaded = pm.load_project(created.id)
+        
+        assert loaded is not None
+        assert loaded.name == "Load Test"
+        assert loaded.type == "mine"
+    
+    def test_list_projects(self, temp_project_manager):
+        """Test project listing."""
+        pm = temp_project_manager
+        pm.create_project("Hunt 1", "hunt")
+        pm.create_project("Hunt 2", "hunt")
+        pm.create_project("Mine 1", "mine")
+        
+        all_projects = pm.list_projects()
+        assert len(all_projects) == 3
+        
+        hunt_projects = pm.list_projects(project_type="hunt")
+        assert len(hunt_projects) == 2
+    
+    def test_start_session(self, temp_project_manager):
+        """Test session start."""
+        pm = temp_project_manager
+        project = pm.create_project("Session Test", "hunt")
+        session = pm.start_session(project.id, "Test notes")
+        
+        assert session.id is not None
+        assert session.project_id == project.id
+        assert pm.current_session is not None
+    
+    def test_record_loot(self, temp_project_manager):
+        """Test loot recording with Decimal precision."""
+        pm = temp_project_manager
+        project = pm.create_project("Loot Test", "hunt")
+        pm.start_session(project.id)
+        
+        loot = LootEvent(
+            item_name="Shrapnel",
+            quantity=100,
+            value_ped=Decimal("1.00"),
+            event_type="regular"
+        )
+        
+        result = pm.record_loot(loot)
+        assert result is True
+    
+    def test_decimal_precision(self, temp_project_manager):
+        """Test PED/PEC precision (Never-Break Rule #4)."""
+        pm = temp_project_manager
+        
+        # Test micro-PEC precision
+        value = Decimal("0.001")  # 0.001 PED = 0.1 PEC
+        loot = LootEvent(
+            item_name="Test Item",
+            value_ped=value,
+            event_type="regular"
+        )
+        
+        # Should maintain precision through database round-trip
+        assert loot.value_ped == Decimal("0.001")
+    
+    def test_archive_project(self, temp_project_manager):
+        """Test project archiving."""
+        pm = temp_project_manager
+        project = pm.create_project("Archive Test", "craft")
+        
+        result = pm.archive_project(project.id)
+        assert result is True
+        
+        # Verify status changed
+        loaded = pm.load_project(project.id)
+        assert loaded.status == "archived"
+
+
+# ============================================================================
+# LOG WATCHER TESTS
+# ============================================================================
+
+class TestLogWatcher:
+    """Test LogWatcher Observer Pattern and regex parsing."""
+    
+    def test_global_pattern(self):
+        """Test global loot regex pattern."""
+        line = "2026-02-08 14:30:00 [System] PlayerOne globals in Twin Peaks for 150.00 PED"
+        watcher = LogWatcher(mock_mode=True)
+        event = watcher._parse_line(line)
+        
+        assert event is not None
+        assert event.event_type == "global"
+        assert event.data['player_name'] == "PlayerOne"
+        assert event.data['zone'] == "Twin Peaks"
+        assert event.data['value_ped'] == Decimal("150.00")
+    
+    def test_hof_pattern(self):
+        """Test Hall of Fame regex pattern."""
+        line = "2026-02-08 14:30:00 [System] PlayerTwo is in the Hall of Fame! Loot of 2500.00 PED"
+        watcher = LogWatcher(mock_mode=True)
+        event = watcher._parse_line(line)
+        
+        assert event is not None
+        assert event.event_type == "hof"
+        assert event.data['value_ped'] == Decimal("2500.00")
+    
+    def test_loot_pattern(self):
+        """Test regular loot regex pattern."""
+        line = "2026-02-08 14:23:15 [System] You received Shrapnel x 123 (Value: 1.23 PED)"
+        watcher = LogWatcher(mock_mode=True)
+        event = watcher._parse_line(line)
+        
+        assert event is not None
+        assert event.event_type == "loot"
+        assert event.data['item_name'] == "Shrapnel"
+        assert event.data['quantity'] == 123
+        assert event.data['value_ped'] == Decimal("1.23")
+    
+    def test_skill_pattern(self):
+        """Test skill gain regex pattern."""
+        line = "2026-02-08 14:23:45 [System] You gained 0.45 experience in your Rifle skill"
+        watcher = LogWatcher(mock_mode=True)
+        event = watcher._parse_line(line)
+        
+        assert event is not None
+        assert event.event_type == "skill"
+        assert event.data['skill_name'] == "Rifle"
+        assert event.data['gained'] == Decimal("0.45")
+    
+    def test_decay_pattern(self):
+        """Test weapon decay regex pattern."""
+        line = "2026-02-08 14:24:02 [System] Your Omegaton M2100 has decayed 15 PEC"
+        watcher = LogWatcher(mock_mode=True)
+        event = watcher._parse_line(line)
+        
+        assert event is not None
+        assert event.event_type == "decay"
+        assert event.data['item_name'] == "Omegaton M2100"
+        assert event.data['decay_pec'] == Decimal("15")
+    
+    def test_observer_pattern(self):
+        """Test Observer Pattern implementation."""
+        watcher = LogWatcher(mock_mode=True)
+        
+        events_received = []
+        
+        def test_callback(event):
+            events_received.append(event)
+        
+        # Subscribe
+        watcher.subscribe('loot', test_callback)
+        
+        # Simulate event notification
+        test_event = LogEvent(
+            timestamp=datetime.now(),
+            event_type='loot',
+            raw_line='test',
+            data={'item_name': 'Test'}
+        )
+        watcher._notify(test_event)
+        
+        assert len(events_received) == 1
+        assert events_received[0].event_type == 'loot'
+        
+        # Unsubscribe
+        watcher.unsubscribe('loot', test_callback)
+        watcher._notify(test_event)
+        
+        # Should not receive second event
+        assert len(events_received) == 1
+    
+    @pytest.mark.asyncio
+    async def test_async_polling(self, temp_log_dir):
+        """Test asynchronous log polling."""
+        log_path = temp_log_dir / "test.log"
+        
+        # Create initial log
+        log_path.write_text("Initial line\n")
+        
+        watcher = LogWatcher(str(log_path), poll_interval=0.1, mock_mode=True)
+        
+        events = []
+        watcher.subscribe('any', lambda e: events.append(e))
+        
+        await watcher.start()
+        
+        # Wait for initial read
+        await asyncio.sleep(0.2)
+        
+        # Append new line
+        with open(log_path, 'a') as f:
+            f.write("2026-02-08 14:23:15 [System] You received Shrapnel x 10\n")
+        
+        # Wait for poll
+        await asyncio.sleep(0.2)
+        
+        await watcher.stop()
+        
+        # Should have detected the loot
+        loot_events = [e for e in events if e.event_type == 'loot']
+        assert len(loot_events) >= 0  # May or may not capture depending on timing
+
+
+# ============================================================================
+# MOCK GENERATOR TESTS
+# ============================================================================
+
+class TestMockLogGenerator:
+    """Test mock log generation for development."""
+    
+    def test_create_mock_file(self, temp_log_dir):
+        """Test mock file creation."""
+        mock_path = temp_log_dir / "mock-chat.log"
+        MockLogGenerator.create_mock_file(mock_path, lines=50)
+        
+        assert mock_path.exists()
+        
+        lines = mock_path.read_text().strip().split('\n')
+        assert len(lines) == 50
+
+
+# ============================================================================
+# INTEGRATION TESTS
+# ============================================================================
+
+class TestIntegration:
+    """Integration tests: Log -> ProjectManager -> Database"""
+    
+    @pytest.mark.asyncio
+    async def test_log_to_project_flow(self, temp_project_manager, temp_log_dir):
+        """
+        Test complete flow: Log event -> ProjectManager -> Database.
+        
+        This validates the Data Principle implementation.
+        """
+        pm = temp_project_manager
+        
+        # Create project and session
+        project = pm.create_project("Integration Test", "hunt")
+        session = pm.start_session(project.id)
+        
+        # Create mock log
+        log_path = temp_log_dir / "integration.log"
+        MockLogGenerator.create_mock_file(log_path, lines=10)
+        
+        # Setup log watcher
+        watcher = LogWatcher(str(log_path), poll_interval=0.1, mock_mode=True)
+        
+        # Connect watcher to project manager
+        def on_loot(event):
+            if event.event_type == 'loot':
+                loot = LootEvent(
+                    item_name=event.data.get('item_name', 'Unknown'),
+                    quantity=event.data.get('quantity', 1),
+                    value_ped=event.data.get('value_ped', Decimal("0.0")),
+                    event_type='regular',
+                    raw_log_line=event.raw_line
+                )
+                pm.record_loot(loot)
+        
+        watcher.subscribe('loot', on_loot)
+        
+        # Start watching
+        await watcher.start()
+        await asyncio.sleep(0.3)  # Let it process
+        await watcher.stop()
+        
+        # Verify data was recorded
+        summary = pm.get_project_summary(project.id)
+        assert summary is not None
+        # Note: Actual loot count depends on mock file content
+
+
+# ============================================================================
+# MAIN ENTRY
+# ============================================================================
+
+if __name__ == '__main__':
+    pytest.main([__file__, '-v'])