diff --git a/codeaide/utils/api_utils.py b/codeaide/utils/api_utils.py
index 3ab244b..ceca5a0 100644
--- a/codeaide/utils/api_utils.py
+++ b/codeaide/utils/api_utils.py
@@ -41,40 +41,20 @@ def parse_response(response):
     if not response or not response.content:
         return None, None, None, None, None, None
 
-    content = response.content[0].text
-
-    def extract_json_field(field_name, content, is_code=False):
-        pattern = rf'"{field_name}"\s*:\s*"((?:\\.|[^"\\])*)"'
-        match = re.search(pattern, content, re.DOTALL)
-        if match:
-            field_content = match.group(1)
-            if is_code:
-                # For code, replace escaped newlines with actual newlines, but only within strings
-                field_content = re.sub(r'(?<!\\)\\n', '\n', field_content)
-                field_content = re.sub(r'\\(?=["\'])', '', field_content)
-            else:
-                # For non-code fields, unescape all content
-                field_content = field_content.encode().decode('unicode_escape')
-            return field_content
-        return None
-
-    def extract_json_array(field_name, content):
-        pattern = rf'"{field_name}"\s*:\s*(\[[^\]]*\])'
-        match = re.search(pattern, content)
-        if match:
-            return json.loads(match.group(1))
-        return []
-
-    text = extract_json_field('text', content)
-    code = extract_json_field('code', content, is_code=True)
-    code_version = extract_json_field('code_version', content)
-    version_description = extract_json_field('version_description', content)
-    requirements = extract_json_array('requirements', content)
-
-    questions_match = re.search(r'"questions"\s*:\s*(\[(?:\s*"(?:\\.|[^"\\])*"\s*,?\s*)*\])', content)
-    questions = json.loads(questions_match.group(1)) if questions_match else []
+    try:
+        content = json.loads(response.content[0].text)
+        
+        text = content.get('text')
+        code = content.get('code')
+        code_version = content.get('code_version')
+        version_description = content.get('version_description')
+        requirements = content.get('requirements', [])
+        questions = content.get('questions', [])
 
-    return text, questions, code, code_version, version_description, requirements
+        return text, questions, code, code_version, version_description, requirements
+    except json.JSONDecodeError:
+        print("Error: Received malformed JSON from the API")
+        return None, None, None, None, None, None
 
 def test_api_connection():
     try:
diff --git a/codeaide/utils/file_handler.py b/codeaide/utils/file_handler.py
index 59d5d38..498db31 100644
--- a/codeaide/utils/file_handler.py
+++ b/codeaide/utils/file_handler.py
@@ -2,10 +2,17 @@
 import shutil
 
 class FileHandler:
-    def __init__(self):
-        self.base_dir = os.path.dirname(os.path.dirname(os.path.dirname(os.path.abspath(__file__))))
+    def __init__(self, base_dir=None):
+        if base_dir is None:
+            self.base_dir = os.path.dirname(os.path.dirname(os.path.dirname(os.path.abspath(__file__))))
+        else:
+            self.base_dir = base_dir
         self.output_dir = os.path.join(self.base_dir, "generated_code")
         self.versions_dict = {}
+        self._ensure_output_dir_exists()
+
+    def _ensure_output_dir_exists(self):
+        os.makedirs(self.output_dir, exist_ok=True)
 
     def clear_output_dir(self):
         print(f"Clearing output directory: {self.output_dir}")
diff --git a/requirements.txt b/requirements.txt
index c3843e8..218d5e4 100644
--- a/requirements.txt
+++ b/requirements.txt
@@ -1,4 +1,5 @@
 anthropic==0.34.2
 python-decouple==3.8
 virtualenv==20.16.2
-pyyaml
\ No newline at end of file
+pyyaml
+pytest
\ No newline at end of file
diff --git a/tests/__init__.py b/tests/__init__.py
new file mode 100644
index 0000000..e69de29
diff --git a/tests/utils/__init__.py b/tests/utils/__init__.py
new file mode 100644
index 0000000..e69de29
diff --git a/tests/utils/test_api_utils.py b/tests/utils/test_api_utils.py
new file mode 100644
index 0000000..a11b13a
--- /dev/null
+++ b/tests/utils/test_api_utils.py
@@ -0,0 +1,89 @@
+import json
+from codeaide.utils.api_utils import parse_response
+from collections import namedtuple
+
+# Mock Response object
+Response = namedtuple('Response', ['content'])
+TextBlock = namedtuple('TextBlock', ['text'])
+
+def test_parse_response_empty():
+    result = parse_response(None)
+    assert result == (None, None, None, None, None, None)
+
+def test_parse_response_no_content():
+    response = Response(content=[])
+    result = parse_response(response)
+    assert result == (None, None, None, None, None, None)
+
+def test_parse_response_valid():
+    content = {
+        "text": "Sample text",
+        "code": "print('Hello, World!')",
+        "code_version": "1.0",
+        "version_description": "Initial version",
+        "requirements": ["pytest"],
+        "questions": ["What does this code do?"]
+    }
+    response = Response(content=[TextBlock(text=json.dumps(content))])
+    text, questions, code, code_version, version_description, requirements = parse_response(response)
+    
+    assert text == "Sample text"
+    assert questions == ["What does this code do?"]
+    assert code == "print('Hello, World!')"
+    assert code_version == "1.0"
+    assert version_description == "Initial version"
+    assert requirements == ["pytest"]
+
+def test_parse_response_missing_fields():
+    content = {
+        "text": "Sample text",
+        "code": "print('Hello, World!')"
+    }
+    response = Response(content=[TextBlock(text=json.dumps(content))])
+    text, questions, code, code_version, version_description, requirements = parse_response(response)
+    
+    assert text == "Sample text"
+    assert questions == []
+    assert code == "print('Hello, World!')"
+    assert code_version is None
+    assert version_description is None
+    assert requirements == []
+
+def test_parse_response_complex_code():
+    content = {
+        "text": "Complex code example",
+        "code": 'def hello():\n    print("Hello, World!")',
+        "code_version": "1.1",
+        "version_description": "Added function",
+        "requirements": [],
+        "questions": []
+    }
+    response = Response(content=[TextBlock(text=json.dumps(content))])
+    text, questions, code, code_version, version_description, requirements = parse_response(response)
+    
+    assert text == "Complex code example"
+    assert code == 'def hello():\n    print("Hello, World!")'
+    assert code_version == "1.1"
+    assert version_description == "Added function"
+
+def test_parse_response_escaped_quotes():
+    content = {
+        "text": 'Text with "quotes"',
+        "code": 'print("Hello, \\"World!\\"")\nprint(\'Single quotes\')',
+        "code_version": "1.2",
+        "version_description": "Added escaped quotes",
+        "requirements": [],
+        "questions": []
+    }
+    response = Response(content=[TextBlock(text=json.dumps(content))])
+    text, questions, code, code_version, version_description, requirements = parse_response(response)
+    
+    assert text == 'Text with "quotes"'
+    assert code == 'print("Hello, \\"World!\\"")\nprint(\'Single quotes\')'
+    assert code_version == "1.2"
+    assert version_description == "Added escaped quotes"
+
+def test_parse_response_malformed_json():
+    response = Response(content=[TextBlock(text="This is not JSON")])
+    result = parse_response(response)
+    assert result == (None, None, None, None, None, None)
\ No newline at end of file
diff --git a/tests/utils/test_file_handler.py b/tests/utils/test_file_handler.py
new file mode 100644
index 0000000..564031d
--- /dev/null
+++ b/tests/utils/test_file_handler.py
@@ -0,0 +1,79 @@
+import pytest
+import os
+import tempfile
+from codeaide.utils.file_handler import FileHandler
+
+@pytest.fixture
+def file_handler():
+    with tempfile.TemporaryDirectory() as temp_dir:
+        handler = FileHandler(base_dir=temp_dir)
+        yield handler
+
+def test_clear_output_dir(file_handler):
+    # Create a file in the output directory
+    test_file = os.path.join(file_handler.output_dir, "test.txt")
+    with open(test_file, "w") as f:
+        f.write("test")
+    
+    file_handler.clear_output_dir()
+    
+    assert os.path.exists(file_handler.output_dir)
+    assert len(os.listdir(file_handler.output_dir)) == 0
+
+def test_save_code(file_handler):
+    code = "print('Hello, World!')"
+    version = "1.0"
+    description = "Initial version"
+    requirements = ["pytest"]
+    
+    code_path = file_handler.save_code(code, version, description, requirements)
+    
+    assert os.path.exists(code_path)
+    with open(code_path, "r") as f:
+        assert f.read() == code
+    
+    assert version in file_handler.versions_dict
+    assert file_handler.versions_dict[version]['version_description'] == description
+    assert file_handler.versions_dict[version]['requirements'] == requirements
+
+def test_save_requirements(file_handler):
+    requirements = ["pytest", "requests"]
+    version = "1.0"
+    
+    req_path = file_handler.save_requirements(requirements, version)
+    
+    assert os.path.exists(req_path)
+    with open(req_path, "r") as f:
+        assert f.read().splitlines() == requirements
+
+def test_get_versions_dict(file_handler):
+    file_handler.save_code("code1", "1.0", "Version 1")
+    file_handler.save_code("code2", "2.0", "Version 2")
+    
+    versions_dict = file_handler.get_versions_dict()
+    
+    assert "1.0" in versions_dict
+    assert "2.0" in versions_dict
+
+def test_get_code(file_handler):
+    original_code = "print('Test')"
+    file_handler.save_code(original_code, "1.0", "Test version")
+    
+    retrieved_code = file_handler.get_code("1.0")
+    
+    assert retrieved_code == original_code
+
+def test_get_requirements(file_handler):
+    original_requirements = ["pytest", "requests"]
+    file_handler.save_code("code", "1.0", "Test", original_requirements)
+    
+    retrieved_requirements = file_handler.get_requirements("1.0")
+    
+    assert retrieved_requirements == original_requirements
+
+def test_nonexistent_version(file_handler):
+    with pytest.raises(FileNotFoundError):
+        file_handler.get_code("nonexistent")
+    
+    with pytest.raises(FileNotFoundError):
+        file_handler.get_requirements("nonexistent")
\ No newline at end of file