diff --git a/solutions/README.md b/solutions/README.md
deleted file mode 100644
index 9852346d2..000000000
--- a/solutions/README.md
+++ /dev/null
@@ -1 +0,0 @@
-# Solutions
diff --git a/solutions/challenge_2/README.md b/solutions/challenge_2/README.md
new file mode 100644
index 000000000..3b3ba87af
--- /dev/null
+++ b/solutions/challenge_2/README.md
@@ -0,0 +1,20 @@
+# Challenge: SpongeCase
+
+## Description
+
+SpongeCase is a style of text where letters alternately appear
+in lower and upper case.
+For example, the word in spongeCase would be `sPoNgEcAsE`.
+
+Write a function that converts the given string into spongeCase.
+
+## Example
+
+```python
+spongecase("hello world")
+# Output: "hElLo wOrLd"
+
+spongecase("Python")
+# Output: "pYtHoN"
+
+**Challenge Reference**: [ET6 Foundations Group 04 - Challenge #2: SpongeCase](https://github.com/MIT-Emerging-Talent/ET6-foundations-group-04/issues/2)
diff --git a/solutions/tests/__init__.py b/solutions/challenge_2/__init__ .py
similarity index 100%
rename from solutions/tests/__init__.py
rename to solutions/challenge_2/__init__ .py
diff --git a/solutions/challenge_2/spongecase_challenge.py b/solutions/challenge_2/spongecase_challenge.py
new file mode 100644
index 000000000..47e0c25ff
--- /dev/null
+++ b/solutions/challenge_2/spongecase_challenge.py
@@ -0,0 +1,32 @@
+def spongecase(text: str) -> str:
+    """
+    Convert a given string into SpongeCase, where letters alternate 
+    between lower and upper case, starting with lower case.
+
+    The position of the character in the string (0-indexed) determines
+    its case:
+    - Even indices: lower case
+    - Odd indices: upper case
+    
+    Non-alphabetic characters are unaffected except they still 
+    participate in the alternation count. 
+    
+    Args:
+        text: The input string to be converted.
+    
+    Returns:
+        A new string in SpongeCase format.
+
+    Examples:
+        >>> spongecase("hello world")
+        'hElLo wOrLd'
+        >>> spongecase("PYTHON")
+        'pYtHoN'
+    """
+    result_chars = []
+    for index, char in enumerate(text):
+        if index % 2 == 0:
+            result_chars.append(char.lower())
+        else:
+            result_chars.append(char.upper())
+    return "".join(result_chars)
diff --git a/solutions/tests/README.md b/solutions/test/challenge_2/README.md
similarity index 100%
rename from solutions/tests/README.md
rename to solutions/test/challenge_2/README.md
diff --git a/solutions/test/challenge_2/__init__.py b/solutions/test/challenge_2/__init__.py
new file mode 100644
index 000000000..e69de29bb
diff --git a/solutions/test/challenge_2/test_spongecase_challenge.py b/solutions/test/challenge_2/test_spongecase_challenge.py
new file mode 100644
index 000000000..e08712ca0
--- /dev/null
+++ b/solutions/test/challenge_2/test_spongecase_challenge.py
@@ -0,0 +1,53 @@
+"""
+This module contains unit tests for the `spongecase` function.
+The tests validate various scenarios, such as:
+- Basic strings with spaces
+- Single words
+- Empty strings
+"""
+import unittest
+from solutions.challenge_2.spongecase_challenge import spongecase
+
+class TestSpongeCase(unittest.TestCase):
+    """Unit tests for the spongecase function."""
+
+    def test_spongecase_basic(self):
+        """
+        Test spongecase with a basic string containing spaces.
+        """
+        self.assertEqual(spongecase("hello world"), "hElLo wOrLd")
+
+    def test_spongecase_single_word(self):
+        """
+        Test spongecase with a single word.
+        """
+        self.assertEqual(spongecase("Python"), "pYtHoN")
+
+    def test_spongecase_empty_string(self):
+        """
+        Test spongecase with an empty string.
+        """
+        self.assertEqual(spongecase(""), "")
+    def test_spongecase_all_caps(self):
+        """
+        Test spongecase with all caps.
+        """
+        self.assertEqual(spongecase("HELLO"), "hElLo")
+        
+    def test_spongecase_all_lowercase(self):
+        """
+        Test spongecase with only lowercase.
+        """
+        self.assertEqual(spongecase("world"), "wOrLd")
+        
+    def test_spongecase_special_characters(self):
+        """
+        Test spongecase with special characters.
+        """
+        # Index:  0 1 2 3 4  5 6   7   8 9  
+        # Char:   H e l l o  ?  1   #   A b
+        # Case:   h E l L o  ?  1   #   a B
+        # => "hElLo?1#aB"
+        self.assertEqual(spongecase("Hello?1#Ab"), "hElLo?1#aB")
+if __name__ == "__main__":
+    unittest.main()
diff --git a/solutions/tests/test_example.py b/solutions/tests/test_example.py
deleted file mode 100644
index 5e6cd7a00..000000000
--- a/solutions/tests/test_example.py
+++ /dev/null
@@ -1,11 +0,0 @@
-"""Test example module."""
-
-import unittest
-
-
-class TestExample(unittest.TestCase):
-    """Test example class."""
-
-    def test_addition(self):
-        """Test addition method."""
-        self.assertEqual(1 + 1, 2)