diff --git a/technotes/.claude/instructions.md b/.claude/instructions.md
similarity index 95%
rename from technotes/.claude/instructions.md
rename to .claude/instructions.md
index 9d039f1..79ca080 100644
--- a/technotes/.claude/instructions.md
+++ b/.claude/instructions.md
@@ -57,6 +57,8 @@ FLASK_PORT        - Web server port (default: 5000)
 
 ```
 mc-webui/
+├── Dockerfile
+├── docker-compose.yml
 ├── app/
 │   ├── main.py           # Flask entry point
 │   ├── config.py         # Environment config
@@ -68,9 +70,6 @@ mc-webui/
 │   │   └── views.py      # HTML views
 │   ├── static/           # CSS, JS
 │   └── templates/        # Jinja2 templates
-├── docker/
-│   ├── Dockerfile
-│   └── docker-compose.yml
 ├── PRD.md               # Full requirements doc
 └── README.md
 ```
@@ -107,5 +106,5 @@ POST /api/contacts/cleanup  - Remove inactive contacts
 1. Develop locally (Windows/WSL)
 2. Push to GitHub
 3. Pull on server (192.168.131.80)
-4. Build and run with docker-compose
+4. Build and run: `docker compose up -d --build`
 5. Test on http://192.168.131.80:5000
\ No newline at end of file
diff --git a/CLAUDE_CODE_PROMPT.md b/CLAUDE_CODE_PROMPT.md
index a5a8a7d..0ae53d0 100644
--- a/CLAUDE_CODE_PROMPT.md
+++ b/CLAUDE_CODE_PROMPT.md
@@ -31,9 +31,8 @@ You are continuing development of **mc-webui** - a lightweight web interface for
 
 ```
 mc-webui/
-├── docker/
-│   ├── Dockerfile
-│   └── docker-compose.yml
+├── Dockerfile
+├── docker-compose.yml
 ├── app/
 │   ├── __init__.py
 │   ├── main.py              # Flask entry point
diff --git a/docker/Dockerfile b/Dockerfile
similarity index 100%
rename from docker/Dockerfile
rename to Dockerfile
diff --git a/README.md b/README.md
index 3d5fb83..1982e06 100644
--- a/README.md
+++ b/README.md
@@ -52,8 +52,7 @@ A lightweight web interface for meshcore-cli, providing browser-based access to
 
 4. **Build and run**
    ```bash
-   # Run from the project root directory
-   docker compose -f docker/docker-compose.yml up -d --build
+   docker compose up -d --build
    ```
 
 5. **Access the web interface**
@@ -87,9 +86,8 @@ See [.env.example](.env.example) for a complete example.
 
 ```
 mc-webui/
-├── docker/
-│   ├── Dockerfile              # Docker image definition
-│   └── docker-compose.yml      # Docker Compose configuration
+├── Dockerfile                  # Docker image definition
+├── docker-compose.yml          # Docker Compose configuration
 ├── app/
 │   ├── __init__.py
 │   ├── main.py                 # Flask entry point
@@ -120,17 +118,17 @@ mc-webui/
 
 ## Development Status
 
-🚧 **Current Phase: 0 - Environment Setup** ✅
+🚧 **Current Phase: 1 - Backend Basics** ✅
 
 ### Roadmap
 
 - [x] Phase 0: Environment Setup
-- [ ] Phase 1: Backend Basics
-- [ ] Phase 2: Frontend Chat View
-- [ ] Phase 3: Message Sending
-- [ ] Phase 4: Auto-refresh
-- [ ] Phase 5: Contact Management
-- [ ] Phase 6: Polish & Documentation
+- [x] Phase 1: Backend Basics (REST API, message parsing, CLI wrapper)
+- [x] Phase 2: Frontend Chat View (Bootstrap UI, message display)
+- [x] Phase 3: Message Sending (Send form, reply functionality)
+- [x] Phase 4: Auto-refresh (60s polling, live updates)
+- [x] Phase 5: Contact Management (Cleanup modal)
+- [ ] Phase 6: Polish & Documentation (Testing, optimization)
 
 See [PRD.md](PRD.md) for detailed requirements and implementation plan.
 
@@ -160,23 +158,21 @@ Access the settings panel to clean up inactive contacts:
 
 ## Docker Commands
 
-**Note:** Run all commands from the project root directory (where .env file is located)
-
 ```bash
 # Start the application
-docker compose -f docker/docker-compose.yml up -d
+docker compose up -d
 
 # View logs
-docker compose -f docker/docker-compose.yml logs -f
+docker compose logs -f
 
 # Stop the application
-docker compose -f docker/docker-compose.yml down
+docker compose down
 
 # Rebuild after code changes
-docker compose -f docker/docker-compose.yml up -d --build
+docker compose up -d --build
 
 # Check container status
-docker compose -f docker/docker-compose.yml ps
+docker compose ps
 ```
 
 ## Troubleshooting
@@ -193,10 +189,10 @@ sudo chmod 666 /dev/serial/by-id/usb-Espressif*
 ### Container won't start
 ```bash
 # Check logs
-docker-compose logs mc-webui
+docker compose logs mc-webui
 
 # Verify .env file exists
-ls -la ../.env
+ls -la .env
 
 # Check if port 5000 is available
 sudo netstat -tulpn | grep 5000
diff --git a/docker/docker-compose.yml b/docker-compose.yml
similarity index 92%
rename from docker/docker-compose.yml
rename to docker-compose.yml
index 4fe0540..995a2ad 100644
--- a/docker/docker-compose.yml
+++ b/docker-compose.yml
@@ -3,8 +3,8 @@ version: '3.8'
 services:
   mc-webui:
     build:
-      context: ..
-      dockerfile: docker/Dockerfile
+      context: .
+      dockerfile: Dockerfile
     container_name: mc-webui
     restart: unless-stopped
     ports:
@@ -23,7 +23,7 @@ services:
       - FLASK_PORT=${FLASK_PORT:-5000}
       - FLASK_DEBUG=${FLASK_DEBUG:-false}
     env_file:
-      - ../.env
+      - .env
     healthcheck:
       test: ["CMD", "python", "-c", "import urllib.request; urllib.request.urlopen('http://localhost:5000/api/status')"]
       interval: 30s