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Default Subtracting Time using mm:ss.00 format

I need to subtract the difference between two different times. For example:
1) In Cell A1 I have typed 03:24.65
2) In Cell B1, I have typed 05:12:55
I formatted the cells as: mm:ss.00.
My formula in C1 is =A1-B1. It returns all pound signs (#######).
Additionally, when you click in the enter field for cell A1 it displays
12:03:25 AM instead of what I typed in A1 which was 03:24.65. I must have
cell C1 display the exact difference. Can anyone tell me the best function
or IF statement to use to calculate this? Thanks in advance.
 
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