SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K

                 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934



         Date of report (date of earliest event reported): July 14, 2003



                        FINANCIAL INDUSTRIES CORPORATION
               (Exact name of Registrant as specified in charter)




       Texas                         0-4690                       74-2126975
 (State or other jurisdiction    (Commission file number)     (I.R.S. employer
     of incorporation)                                       identification no.)





                      6500 River Place Blvd., Building One
                               Austin, Texas 78730
                    (Address of principal executive offices)


       Registrant's telephone number, including area code: (512) 404-5000

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ITEM 9.Regulation FD Disclosure

On July  14,  2003,  Financial  Industries  Corporation  sent the  letter  filed
herewith as Exhibit 99.1 to Institutional Shareholder Services.

ITEM 7.Financial Statements, Pro Forma Financial Information and Exhibits.

       (c)Exhibits.

       99.1*- Letter dated July 14 2003 from Financial Industries Corporation to
              Institutional Shareholder Services.

       __________________
       * Filed herewith



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                                   SIGNATURES
     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.

                                        FINANCIAL INDUSTRIES CORPORATION



                                        Date: July 14, 2003

                                        By: /s/ Theodore A. Fleron

                                        ____________________________
                                        Theodore A. Fleron
                                        Vice President and Secretary


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                                  Exhibit 99.1





July 14, 2003

Mr. Bimal Patel
Senior Analyst, U.S. Research
Institutional Shareholder Services
2099 Gaither Road, Suite 501
Rockville, MD 20850-4045

Dear Mr. Patel:

On behalf of the Board of Directors of Financial Industries Corporation,  I want
to  thank  you  for  taking  the  time to meet  with  us last  Thursday.  We are
especially  appreciative of the time and effort that must have been spent by Ms.
Westcott,  Mr. Kumar and you in familiarizing  yourselves with FIC. We know that
the shareholders of corporate  America rely very heavily on your opinions and we
would greatly  appreciate and value a favorable  determination  on our behalf by
ISS.

In the course of our call, a number of issues arose that were difficult to cover
adequately given the time constraints of the meeting and the number of topics we
all wished to cover.  We  thought it might be helpful to your  review to have us
address those issues in written  form.  To that end,  this letter  addresses the
issues that we believe merited further explanation. If after reading this letter
you or any of your  colleagues  have further  questions  regarding  these or any
other matters, please contact me.

The Mitte Settlement

      Why did FIC pay $3 million to a person that was terminated for cause?

Following  Mr.  Mitte's  termination,  FIC  sued  Mr.  Mitte  for  repayment  of
approximately  $500,000 of personal expenses of Mr. Mitte that had been paid for
by the company and for the return of a disputed $1 million  contribution  to Mr.
Mitte's family foundation.  Mr. Mitte in turn sued FIC for amounts allegedly due
to him under his  employment  agreement.  Such  amounts due Mr.  Mitte,  under a
worse-case  scenario,  could have exceeded $13 million.  Mr. Mitte's  employment
agreement,  unlike most employment  agreements,  did not address termination for
cause,  and in particular did not eliminate or even limit severance  payments in
the event of a termination for cause. The company did terminate Mr. Mitte on the

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basis of  disability  (in  addition to  terminating  him for  cause);  under the
employment  agreement,  a termination  for disability did not entitle him to any
severance,  but he strongly  disputed the existence of any such  disability as a
basis for  termination.  While the Company  believed  that it had good chance of
overall success in such  litigation,  such success was by no means assured.  FIC
concluded  that prudence  required that FIC avail itself of the  opportunity  to
settle the  litigation  with Mr. Mitte by paying a small  fraction of the amount
that Mr. Mitte sought in the  litigation.  Thus, FIC agreed to fix its liability
to Mr. Mitte at $3.5 million,  against which Mr. Mitte agreed to offset $500,000
as reimbursement of personal  expenses paid by FIC. The $3 million is to be paid
in three annual installments. (FIC concluded that it was unlikely to recover the
disputed $1 million contributed to the family foundation, and thus released that
claim.) By entering  into this monetary  settlement,  FIC avoided (i) a possible
ruinous  financial  judgment,  (ii) the incurrence of substantial legal fees and
(iii) the ongoing  disruption  to the business  caused by FIC's dispute with Mr.
Mitte.  The elimination of the "overhang"  caused by the ongoing  litigation was
deemed essential to allowing the company to go forward with its business plan.

                          Did FIC buy the Mitte Proxy?

The  amounts  that FIC paid Mr.  Mitte were paid in  settlement  of Mr.  Mitte's
contractual  claims.  FIC did not pay any  company  funds for the Mitte  Proxy -
which  perhaps would better be  characterized  as the "Mitte  Foundation  Proxy"
because  it is the Mitte  Foundation  that owns the stock in  question  and that
granted the proxy.  The proxy was given by the Mitte  Foundation in exchange for
the company's  commitment  to use its  commercially  reasonable  efforts to find
buyers  for the  Foundation's  FIC stock in  specified  amounts  over a two-year
period.  The proxy is independent of the monetary  settlement with Mr. Mitte and
was the subject of discussions that took place long after discussions  regarding
settlement of Mr. Mitte's  monetary  claims had commenced.  The proxy expires in
the  event  that FIC  fails to find  buyers  in  accordance  with the  specified
timetable -  regardless  of whether FIC pays Mr. Mitte the amounts due him under
the settlement.


            Why is the Mitte Proxy being voted for the current Board?

Otter  Creek's  position  that the  company  should not vote the Mitte  Proxy or
should vote the Mitte Proxy in a  proportionate  manner will actually give Otter
Creek an unfair advantage in the contest. Otter Creek's position will reduce the
universe of shares voted at the meeting and  effectively  increase Otter Creek's
voting  power.  The impact of this is made even more  material by the ability of
shareholders  to use  cumulative  voting.  The Board does not believe  that this
would be a fair result and believes that it, in fact, would adversely impact the
voting  franchise of its other 95%-plus  shareholders.  This matter is currently
the  subject  of  litigation  between  Otter  Creek and the  company.  The Board
believes that it is more

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consistent  with the Board's  fiduciary  duties to the  shareholders  to let the
courts determine the appropriate outcome of this dispute,  than for the Board to
unilaterally  change its position as to the appropriate  manner in which to vote
the Mitte Proxy.  It is worth noting that there is no Texas case law  supporting
Otter  Creek's  position  and that for several  decades  comparable  cases under
Delaware law have supported the company's position.

The New Era Transactions

               Why did FIC acquire businesses from, and enter into
            marketing relationships, with persons who have had legal
             difficulties associated with their business activities?

The company  recently  completed the acquisition of three  companies  (including
Total  Compensation  Group (TCG)) and agreed to employ the  principal  owners of
those  companies.  The  acquisitions  were consummated only after a thorough due
diligence  review  of each  company  and  their  principals.  As part of the due
diligence  process,  FIC was provided,  by the sellers,  with a copy of the Fort
Worth newspaper article that Otter Creek has publicized.  The company has a more
in- depth knowledge of the circumstances that were described in that article and
is comfortable  that the individuals and businesses with whom it is dealing have
a high level of integrity and that the  individuals,  as employees,  opposed the
business practices  criticized in the article.  Finally,  the company's policies
and procedures are specifically  designed to avoid the problems described in the
Fort Worth article.

The company  also  recently  entered into a marketing  relationship  with Equita
Insurance  and Financial  Services,  Inc. The  marketing  relationship  was only
entered into after a similarly  thorough due diligence  review of Equita and its
principals.  The  company  was aware of the Ohio  matter  and was able to assure
itself that the Ohio matter was an isolated  incident and that Equita's  current
policies and procedures protect against a repeat of such incident.  In addition,
the company's policies and procedures governing the relationship between FIC and
Equita provide similar safeguards.

        Is Mr. Shifrin conflicted in his role as director because of his
                           business dealings with FIC?

Mr. Shifrin is the CEO of American  Physicians  Service Group,  Inc. (APS).  Mr.
Shifrin   introduced  the  company  to  the  various  parties  to  the  New  Era
transactions  described above. In connection with such introduction APS received
the  option  described  below.  The option is the only  contractual  arrangement
between  FIC and either APS or Mr.  Shifrin.  Because the value of the option to
APS depends on the  appreciation  of FIC's stock  price,  the  interests  of Mr.
Shifrin and all of FIC's shareholders are fully aligned.


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           How was the option issued to Mr. Shifrin's company valued?

The option granted to APS has an exercise price of $16.42 per share, but is only
exercisable if the aggregate  amount of collected  premiums for life and annuity
products  sold by FIC exceeds $200  million for the period  between July 1, 2003
and December 21, 2005. (Sales of such products in fiscal 2002 were approximately
$22  million.)  The  performance  aspect  of  the  option  prevents  a  standard
Black-Shoals  valuation of such option. The company did, however,  conclude that
the option,  the terms of which were negotiated in an arms'-length  transaction,
were fair and reasonable to the company, especially in light of the fact that no
real value is  attributable to the option unless the New Era  transactions  turn
out to be highly successful.  Additionally,  the company retained an independent
investment  banker to advise the  company on the  fairness of all aspects of the
transactions,  pursuant to which the option was granted,  including the issuance
of the option.

Conclusion

Finally,  we hope that in making your final decision,  you take into account the
circumstances  under which the company has  operated  during the last year.  Not
only was FIC faced with difficult industry and general economic conditions,  its
Board, after a comprehensive internal investigation, made the wrenching decision
to  terminate  FIC's CEO,  founder and  largest  shareholder.  Such  termination
ultimately led to litigation,  which for the reasons  discussed above, the Board
believes was settled in a prudent manner.  At the same time,  another party with
no apparent financing or transactional  experience  attempted to put the company
into play.  Despite the  absence of any bona fide offer to acquire the  company,
FIC's Board,  duty-bound and fully  committed to maximizing  shareholder  value,
formed a special  committee of  independent  directors to explore all  strategic
alternatives,  including a sale of the company.  The special committee concluded
that given the current condition of the company and its industry, a sale at this
time would not maximize  shareholder  value. It concluded that the best strategy
involved a focus on growth, both organic and through acquisitions and alliances,
and stronger cost controls. Since the announcement of such conclusion in June of
this year,  FIC's stock has climbed more than 14%. We have begun  implementation
of this business plan in earnest - having among other things, completed a series
of  acquisitions,  formed a new  marketing  alliance and cut sales and marketing
costs.  Determining whether management's plan is successful will ultimately take
some time.  Simply put,  we believe  that we have made  significant  progress in
stabilizing  the company and ask for a reasonable  amount of time to fairly test
our business plan. As noted in our meeting,  the entire Board is up for election
and is held accountable  each and every year. Our opponents,  on the other hand,
have as their exclusive plan a sale of the company. They have not indicated what
they will do in the interim if they cannot


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find a buyer  willing to pay the right price - which is exactly  where we expect
they will find  themselves.  Our fear is that the  uncertainty  during  any such
interim period will plunge the company back into deeper instability. Once again,
we truly appreciate all of your time and effort on behalf of the shareholders of
FIC.



Sincerely,


E. E. "Gene" Payne, Ph.D.
President, Chairman and CEO






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