Frost and McClarnon were both hoping to secure $450,000 (GBP250,000) one-album deals with music giant EMI after the British chart-topping girl group decided to take a year off to pursue solo projects.
However a company insider told British newspaper THE DAILY MIRROR, "This was never the case.
"There is not enough interest in the girls to justify that type of cash. Individually they just don't have the fan base."
It was third band member Natasha Hamilton's decision to spend more time with her young son JOSH which led to the WHOLE AGAIN singers' decision to disband for a year.
A spokeswoman for the band remains positive, saying, "They already have a fan base and don't have to start from scratch.
"They could have a great future as solo artists."
The future individual careers of Frost and McClarnon do not look so promising when compared to other girl bands.
The EMI source asks, "What chance do Atomic Kitten have if the Spice Girls can't carve out successful solo careers?