Relative imports in Python Flask don't seem to work

I have the following directory structure for my Flask project

├── API
│   ├── __init__.py
│   ├── controllers.py
│   ├── models.py
│   └── test
│       ├── first_test.py
│       
├── config.py
├── requirements.txt
├── run.py
└── setup.py

My setup.py looks like following:

from setuptools import setup

    setup(
        name='project_name',
        packages=['API'],
        include_package_data=True
    )

I'm concerned about how can I import my models and app (__init__) into my test files (first_test.py).

So, far I have tried

from project_name.API import app

gives from project_name.API import app
E   ImportError: No module named project_name.API

from ..API import app
from ..API import app
E   ValueError: Attempted relative import in non-package

and

from .. import app
from .. import app
E   ValueError: Attempted relative import in non-package

I can't figure out how to import the files. Also, I running the test files with py.test API/test/first_test.py