diff --git a/src/generators/app/index.js b/src/generators/app/index.js
index f6c1e9c0e..b297b15f7 100644
--- a/src/generators/app/index.js
+++ b/src/generators/app/index.js
@@ -544,7 +544,7 @@ export class Generator extends Base {
 
         // Convert HTML into Pug
         if(this.filters.pug) {
-          let pugFilter = filter(['**/*.html', '!client/app.template.html'], {restore: true});
+          const pugFilter = filter(['**/*.pug'], {restore: true});
 
           function pugReplacer(contents) {
             return contents
@@ -571,9 +571,8 @@ export class Generator extends Base {
             rename(path => {
               path.extname = '.pug';
             }),
-            tap(function(file, t) {
-              var contents = file.contents.toString();
-              contents = pugReplacer(contents);
+            tap(file => {
+              const contents = pugReplacer(file.contents.toString());
               file.contents = new Buffer(contents);
             }),
             pugFilter.restore
diff --git a/src/generators/util.js b/src/generators/util.js
index 90a2db5a3..a31d82265 100644
--- a/src/generators/util.js
+++ b/src/generators/util.js
@@ -134,7 +134,7 @@ function templateIsUsable(self, filteredFile) {
 }
 
 /**
- * 
+ *
  */
 export function processDirectory(source, destination) {
   var self = this;
@@ -171,6 +171,10 @@ export function processDirectory(source, destination) {
       copy = true;
     }
 
+    if(self.filters.pug && dest.indexOf('.html') !== -1 && dest.indexOf('app.template') === -1) {
+      dest = dest.replace('.html', '.pug');
+    }
+
     if(templateIsUsable(self, filteredFile)) {
       if(copy) {
         self.fs.copy(src, dest);
diff --git a/src/test/main.test.js b/src/test/main.test.js
index c12d07dde..ecfd4ec63 100644
--- a/src/test/main.test.js
+++ b/src/test/main.test.js
@@ -192,7 +192,7 @@ describe('angular-fullstack:app', function() {
     var testOptions = {
       buildtool: 'gulp',
       transpiler: 'ts',
-      markup: 'pug',
+      markup: 'html',
       stylesheet: 'less',
       router: 'ngroute',
       testing: 'jasmine',
diff --git a/src/test/test-helpers.js b/src/test/test-helpers.js
index 04c549924..344736adb 100644
--- a/src/test/test-helpers.js
+++ b/src/test/test-helpers.js
@@ -112,7 +112,7 @@ export function runGen(prompts, opts={}) {
     })
     .withGenerators([
       require.resolve('../generators/endpoint'),
-      // [helpers.createDummyGenerator(), 'ng-component:app']
+      [helpers.createDummyGenerator(), 'angular-fullstack-component:app']
     ])
     // .withArguments(['upperCaseBug'])
     .withOptions(options);
diff --git a/templates/app/_package.json b/templates/app/_package.json
index 1aef54faa..f16a213cf 100644
--- a/templates/app/_package.json
+++ b/templates/app/_package.json
@@ -28,7 +28,7 @@
     "babel-preset-es2017": "^6.16.0",
     "babel-preset-stage-0": "^6.16.0",
     "babel-runtime": "^6.18.0",<% if(filters.pug) { %>
-    "pug": "2.0.0-beta6",<% } %><% if(filters.html) { %>
+    "pug": "^2.0.0",<% } %><% if(filters.html) { %>
     "ejs": "^2.5.3",<% } %><% if(filters.mongoose) { %>
     "mongoose": "^4.1.2",
     "bluebird": "^3.3.3",
@@ -106,7 +106,6 @@
     <%# END CLIENT %>
 
     "autoprefixer": "^7.1.3",
-    "babel-core": "^6.6.5",
     "babel-eslint": "^7.2.3",
     "babel-register": "^6.16.0",
     "bs-fullscreen-message": "^1.0.0",
@@ -115,10 +114,8 @@
     "babel-plugin-syntax-flow": "^6.8.0",
     "babel-plugin-transform-flow-comments": "^6.8.0",<% } %>
     "babel-plugin-transform-class-properties": "^6.6.0",
-    "babel-plugin-transform-runtime": "^6.6.0",
     "babel-plugin-istanbul": "^4.1.4",
     "babel-preset-env": "^1.6.1",
-    "babel-preset-es2015": "^6.6.0",
     "cross-env": "^5.1.1",
     "eslint": "^2.12.0",
     "del": "^3.0.0",
@@ -157,7 +154,7 @@
     "html-webpack-plugin": "^2.24.1",
     "html-webpack-harddisk-plugin": "~0.1.0",
     <%_ if(filters.pug) { _%>
-    "pug-html-loader": "^1.0.8",<% } %>
+    "pug-html-loader": "^1.1.5",<% } %>
     "typescript": "~2.6.1",
     "awesome-typescript-loader": "^3.3.0",
     "babel-loader": "^7.1.2",