I know this is an old tool for compressing BMP files, but it is fast and it compression ratio is better than other practical compressors (I am not talking about FLIF).
The original version wipes out the BMP header at offset 0x26 (XpixelsPerM) and 0x2A (YpixelsPerM). So FreeArc fails to decompress the file as the BMP header has been altered.
I patched the compressor to save these bytes at the end of the compressed file and then read them to restore the header. Now it works perfectly with FreeArc.
The patch only works for BMP. Do not use BMF2 to compress the TGA files by FreeArc.