diff --git a/.travis.yml b/.travis.yml
index 3b03796..20c13a5 100644
--- a/.travis.yml
+++ b/.travis.yml
@@ -1,15 +1,8 @@
 rvm:
-  - 1.9.3
-  - 2.0.0
+  - 2.2.2
   - jruby-19mode
-  - ruby-head
-
-matrix:
-  allow_failures:
-    - rvm: ruby-head
-    - gemfile: gemfiles/rails_head.gemfile
 
 gemfile:
   - gemfiles/rails_3.gemfile
-  - gemfiles/rails_4.gemfile
-  - gemfiles/rails_head.gemfile
+  - gemfiles/rails_4.0.gemfile
+  - gemfiles/rails_4.1.gemfile
diff --git a/CHANGELOG.md b/CHANGELOG.md
index b65a9d4..d640559 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -2,6 +2,12 @@
 
 ### Future
 
+### 0.3.0
+
+- specify mime-types < 3 due to requirement for ruby 2.0 [pitr]
+- fix bug where html files outside of inside_paths were still being processed [sugarskull, #137]
+- remove support for Rails 4.2+ in branch 0.x [pitr]
+
 ### 0.2.0
 
 - Add config.angular_templates.inside_paths [sars, #90]
diff --git a/Gemfile b/Gemfile
index 8dedc1b..9ce1691 100644
--- a/Gemfile
+++ b/Gemfile
@@ -1,7 +1,7 @@
 source "https://rubygems.org"
 
 gem "rails", "~> 4.1.0"
-gem "slim"
+gem "slim-rails"
 gem "haml"
 gem "kramdown"
 
diff --git a/README.md b/README.md
index 9fd3af0..84c0f54 100644
--- a/README.md
+++ b/README.md
@@ -2,6 +2,8 @@
 
 Adds your HTML templates into Angular's `$templateCache` using Rails asset pipeline.
 
+**IMPORTANT**: for Rails 4.2+ use version 1.0+ of this gem. For Rails 3 - 4.1 use version 0.x
+
 It removes the need for AJAX calls to retrieve the templates (or for you to manually set them into the DOM).
 
 ## Usage
@@ -215,7 +217,7 @@ config.angular_templates.htmlcompressor = {
 
 ## License
 
-MIT License. Copyright 2014 Pitr
+MIT License. Copyright 2017 pitr
 
 ## Authors & contributors
 
diff --git a/angular-rails-templates.gemspec b/angular-rails-templates.gemspec
index 03b7017..6498df8 100644
--- a/angular-rails-templates.gemspec
+++ b/angular-rails-templates.gemspec
@@ -17,10 +17,11 @@ Gem::Specification.new do |s|
   s.require_paths = ["lib"]
 
   s.add_dependency "railties", ">= 3.1"
-  s.add_dependency "sprockets", "~> 2"
+  s.add_dependency "sprockets", "~> 2.0"
   s.add_dependency "tilt"
 
   s.add_development_dependency "minitest"
   s.add_development_dependency "capybara"
+  s.add_development_dependency "mime-types", "< 3"
   s.add_development_dependency "uglifier"
 end
diff --git a/gemfiles/rails_4.gemfile b/gemfiles/rails_4.0.gemfile
similarity index 80%
rename from gemfiles/rails_4.gemfile
rename to gemfiles/rails_4.0.gemfile
index 28f88b7..a5762af 100644
--- a/gemfiles/rails_4.gemfile
+++ b/gemfiles/rails_4.0.gemfile
@@ -1,9 +1,8 @@
 source "https://rubygems.org"
 
-gem "rails", "~> 4.0.1"
+gem "rails", "~> 4.0.0"
 gem "slim-rails"
 gem "haml"
 gem "kramdown"
 
-
 gemspec :path => ".././"
diff --git a/gemfiles/rails_4.1.gemfile b/gemfiles/rails_4.1.gemfile
new file mode 100644
index 0000000..334b99b
--- /dev/null
+++ b/gemfiles/rails_4.1.gemfile
@@ -0,0 +1,8 @@
+source "https://rubygems.org"
+
+gem "rails", "~> 4.1.0"
+gem "slim-rails"
+gem "haml"
+gem "kramdown"
+
+gemspec :path => ".././"
diff --git a/lib/angular-rails-templates/template.rb b/lib/angular-rails-templates/template.rb
index d54b309..6dc6570 100644
--- a/lib/angular-rails-templates/template.rb
+++ b/lib/angular-rails-templates/template.rb
@@ -14,18 +14,22 @@ def prepare
       # we only want to process html assets inside those specified in configuration.inside_paths
       @asset_should_be_processed = configuration.inside_paths.any? { |folder| file.match(folder.to_s) }
 
+      unless @asset_should_be_processed
+        @data = nil
+        return
+      end
+      
       if configuration.htmlcompressor and @asset_should_be_processed
         @data = compress data
       end
     end
 
     def evaluate(scope, locals, &block)
-      locals[:html] = escape_javascript data.chomp
-      locals[:angular_template_name] = logical_template_path(scope)
-      locals[:source_file] = "#{scope.pathname}".sub(/^#{Rails.root}\//,'')
-      locals[:angular_module] = configuration.module_name
-
       if @asset_should_be_processed
+        locals[:html] = escape_javascript data.chomp
+        locals[:angular_template_name] = logical_template_path(scope)
+        locals[:source_file] = "#{scope.pathname}".sub(/^#{Rails.root}\//,'')
+        locals[:angular_module] = configuration.module_name
         AngularJsTemplateWrapper.render(scope, locals)
       else
         data
diff --git a/lib/angular-rails-templates/version.rb b/lib/angular-rails-templates/version.rb
index ab4e85d..3537262 100644
--- a/lib/angular-rails-templates/version.rb
+++ b/lib/angular-rails-templates/version.rb
@@ -1,3 +1,3 @@
 module AngularRailsTemplates
-  VERSION = '0.2.0'
+  VERSION = '0.3.0'
 end