8-K

                     U.S. 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): January 3, 2003


                           Traffic Technology, Inc.
           (Exact name of registrant as specified in its charter)


                                   Arizona
        (State or jurisdiction of incorporation or organization)


                                   000-33039
                            (Commission File Number)


                                   86-0932112
                   (I.R.S. Employer Identification Number)


     18300 Von Karman, Suite 710, Irvine CA                       92612
    (Address of principal executive offices)                  (Zip Code)


               Registrant's telephone number:  (949) 809-2126


              8350 East Evans Road, Suite B-4, Scottsdale, AZ 85260
          (Former name or former address, if changed since last report)


ITEM 2.  ACQUISITION OR DISPOSITION OF ASSETS.

     The Registrant has acquired, through a stock for stock tax-free
exchange, CalbaTech, Inc. ("CalbaTech") as a wholly-owned subsidiary.
The acquisition is pursuant to an Agreement and Plan of Exchange
("Agreement").  Pursuant to the Agreement, CalbaTech has become a
wholly-owned subsidiary of the Registrant and will, when practicable,
merge into the Registrant and change the name of the Registrant to
CalbaTech, Inc.

     CalbaTech is incorporated in Nevada and is focused on incubating
life science based companies that are developing next generation
products and technologies. Products and/or technologies that fit the
CalbaTech model for development are those that will be capable of
generating sales or licensing revenue within two years, and will
require less than $1,000,000 to bring a product to market. CalbaTech
is acquiring technologies and/or products fitting its model through a
stock swap of a small percentage its own shares for 100% of the
shares of the company being acquired. This is a pre-curser to
licensing and/or selling the products and/or technologies to
organizations capable of commercializing them, or in the alternative,
maintaining the acquired technologies or products and operating them
under CalbaTech.

     CalbaTech intends to accomplish its mission in three ways: 1)
Through technology transfer alliances with universities, both in
California and Scotland, for which CalbaTech acquires, licenses and
finances the further development of new university technologies to
reach the market place; 2) Identification and acquisition of non-
university developed technologies, and specifically, providing a
proven path for United Kingdom technologies to enter into the US
marketplace; and 3) Development of technological innovations in-house
by CalbaTech scientists.

     To date, CalbaTech has reached preliminary agreements with the
following companies to either acquire and incubate, or to provide
funds in exchange for equity, a percentage of gross profits, or an
exclusive license:

     - A biomedical technology company based in Scotland that is
       developing and manufacturing instruments and consumables for use
       in diagnostic and immunological research procedures in clinical
       and research laboratories worldwide.  This company has completed
       development of its first product and has begun sales through a
       distribution network in the UK.

     - A Southern California based company developing a novel device
       for DNA and RNA purification in sample preparation.  DNA and RNA
       are purified from cellular lysate using "smart membranes",
       circumventing the need for tedious procedures involved in
       biomagnetic and other solid phase extraction techniques.

     - Collaboration with an eminent physicist developing a novel
       technique, which in his opinion represents a fundamental
       breakthrough in radiation detection technology. The key
       advantages of this technique are that it can be applied to the
       remote detection of nuclear materials.

     The Registrant, pursuant to Board of Director and shareholder
approval, shall take all steps necessary to effect a Fourteen for One
(14 for 1) reverse split of its outstanding shares.  The Registrant,
for the acquisition of CalbaTech, agreed to issue, post-reverse, a
total of Nine Million, Seven Hundred and Six Thousand, Four Hundred
and Seventy-Three (9,706,473) shares of the Registrant to the
shareholders of CalbaTech, such that, post issuance of the
acquisition shares and post-reverse split, the shareholders of
CalbaTech will own Eighty-Nine Percent (89%) of the then outstanding
shares of the Registrant.  It is further understood that in the event
that there are not enough shares authorized to issue the entire
Eighty-Nine Percent (89%) controlling interest to CalbaTech prior to
its acquisition, the Registrant will issue all of the shares that it
has authorized and understands and agrees that the Registrant, post
acquisition of CalbaTech, will take such steps necessary to increase
the number of authorized shares and thereafter issue that amount of
shares to equal the agreed upon Eighty-Nine Percent (89%) interest.
Post issuance of acquisition shares and post-reverse split, in
addition to the outstanding shares of the Registrant prior the
acquisition of CalbaTech, there will be Ten Million, Nine Hundred and
Six Thousand, One Hundred and Forty-Nine Shares outstanding with the
shareholders of CalbaTech owning Nine Million, Seven Hundred and Six
Thousand, Four Hundred and Seventy-Three (9,706,473) shares of the
Registrant.

     CalbaTech further agreed to pay a total of Two Hundred Thousand
Dollars ($200,000) as follows: CalbaTech paid a total of One Hundred
Thousand Dollars ($100,000) upon the execution of the Agreement and
CalbaTech agrees to make another payment of Fifty Thousand Dollars
($50,000) three (3) months after the Closing, and a final payment of
Fifty Thousand Dollars ($50,000) six (6) months after closing (the
"Remainder Payments").  It is the understanding of CalbaTech and the
Registrant that those monies will be used for the settlement of all
remaining outstanding creditor liabilities of the Registrant that
existed prior to the acquisition of CalbaTech. The Remainder Payments
will be made pursuant to a Promissory Note between CalbaTech and a
liquidating trust designee.  The Promissory Note will be signed by
CalbaTech, and its founders as individuals, specifically Edward
Deese, James DeOlden, Esq., and John F. Gordon, Ph.D.

     It is understood and agreed to by the Registrant that CalbaTech
is not, under any circumstances, assuming the debts, liabilities and
obligations of the Registrant.

ITEM 5.  OTHER EVENTS

     The current Board of Directors of the Registrant has added three
new members to the Board.  These new members will remain members
until such time as the Registrant holds an annual meeting to elect
new Board of Directors.  These new Board of Directors are Edward
Deese, James DeOlden and Dr. John Gordon.  The Registrant is
currently organizing Audit and Compensation Committees and as soon as
practicable, the new Board members anticipate offering Committee
positions to Mssrs. Bourke and Messina in addition to remaining with
the Registrant as independent members of the Board of Directors.


James DeOlden, Esq. - Chief Executive Officer, Director

     Mr. DeOlden, B.A. History (1996) from Virginia Commonwealth
University, J.D. (1998) from Whittier Law School, is an attorney
admitted to the California Bar and practices transactional and
securities law in Irvine, California.  Mr. DeOlden, in conjunction
with being a founder of CalbaTech, is limiting his practice of law to
focus on the growth and development of CalbaTech.  In his law
practice, Mr. DeOlden currently represents or has represented both
publicly-traded and private companies, with the focus being on
emerging growth companies in various stages of corporate existence or
development.

John Gordon, Ph.D. - Executive Vice President, Director

     Dr. Gordon, B.Sc. Honors in Cell Biology (1982), Ph.D.
Biochemistry (1989) from the University of Glasgow is an experienced
immunologist/biochemist. Dr. Gordon is the pioneer of a biomedical
technology based on exploiting Compact Disc technology that is likely
to become the main alternative to "laboratory on a chip" technologies
used in drug screening and diagnostics. The bio-compact disc enables
chemical and biological testing to be performed within modified
optical discs, using either a stand-alone instrument that acts as the
optical disc reader, or a slightly modified disc drive that plugs
into a standard personal computer (PC).

     Dr. Gordon's primary role will be to identify promising
technologies developed by others. Dr. Gordon has spent the last 20
years in the life-sciences developing and researching technologies.

Edward H. Deese - President, Chief Operating Officer, Director

     Mr. Deese, B.S. Economics (1985) from the University of
California, Irvine has been involved in entrepreneurial business
development for the past 17 years. Most recently, Mr. Deese has been
served in several interim capacities for publicly traded companies or
subsidiaries thereof, including as the Chief Operating Officer of
Largo Vista Group, Ltd. and as the President and CEO of Majestic
Safe-T-Products, a wholly-owned subsidiary of The Majestic Companies,
Ltd.  Prior to this, Mr. Deese was a founder, Director, and Chief
Financial Officer of Burstein Technologies, Inc., an Irvine,
California bio-technology company. At Burstein Technologies, he
assisted in raising over $35 million in private equity funding. Prior
to Burstein Technologies, Mr. Deese served in a variety of
entrepreneurial ventures, including three companies that went public
through IPOs.

David Killen - Director of Marketing and Business Development

     Mr. Killen has 13 years of experience in designing, structuring
and implementing sales and marketing processes to provide capital
equipment, consumables and software to the Life Science/Biotechnology
markets. Following his undergraduate and postgraduate training in
Molecular Genetics and Molecular Biology at the University of Glasgow
in Scotland, Mr. Killen joined International Biotechnologies Inc. in
Cambridge England as part of a start-up team that established market
presence for IBI in the UK. After relocating to the United States, he
spent several years with Kodak Scientific Imaging Systems before
joining Schleicher and Schuell (Dassel, Germany) as USA Life Sciences
Marketing Manager. Most recently, Mr. Killen worked as Business
Manager for Genetix (New Milton England) to develop their operations
in the Eastern USA.

Marco Messina - Director

     Mr. Messina founded Unilight, Inc. in 1998 as the co-inventor of
its technology to prototype and commercialize the Unilight signal and
technology. Mr. Messina brings over 25 years of business management
experience including international banking, corporate finance,
information systems management; new technology development and
commercialization (co-invented and developed a hardware and software
system for electronic distribution of video games); visiting lecturer
and associate professor of business management at undergraduate and
MBA programs at Seattle University; fifteen years managing IT
consulting practices (Fenix Consulting, Platinum Technology, Computer
Associates); executive management (President, National Scientific
Corp., a NASDAQ listed company focused on patents acquisitions and
development). Mr. Messina holds a BS in Psychology and a MBA from
Indiana University Graduate School of Business.

Richard Bourke - Director

     Mr. Bourke has over 20 years experience in financial management
and services. His management background includes Directorships,
Founder and President of several entrepreneurial businesses. He has
broad industry experience, including manufacturing, electronics,
investment banking and venture capital, and has participated in over
$60 million of financings for early stage companies. From 1994 to
1997 he was the EVP and CFO of The Little Gym International, Inc., an
international children's services firm. Since 1997 he has been the
founder and Chairman of National Integrative Medicine, Inc., an
Internet healthcare company. Mr. Bourke's prior experience includes
VP of Corporate Finance for Norcross Securities, an NASD broker-
dealer in Phoenix, Arizona; President of the Development Corporation
of Montana, a geographically targeted risk capital firm; President of
Montana Beverages, Ltd.; VP of Air Plastics, Inc. He holds a BA from
Northwestern University and an MBA from Columbia University Graduate
School of Business.

ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS.

     Financial statements as required by this item will be filed by
amendment not later than 60 days after the date that the initial
report on Form 8-K must be filed (January 17, 2003) a date not later
than March 18, 2003.

                                SIGNATURE

     Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                   Traffic Technology, Inc.


Dated: January 17, 2003            By: /s/ James D. DeOlden
                                   James D. DeOlden, CEO

                                EXHIBIT INDEX

NUMBER                    DESCRIPTION

2     Agreement and Plan of Exchange  (see below).

EX-2

                                  EXHIBIT 2

                          AGREEMENT AND PLAN OF EXCHANGE

     This Agreement and Plan of Exchange ("Agreement") between
Traffic Technology, Inc., an Arizona corporation ("Traffic Tech" or
"TTI"), and CalbaTech, Inc., a Nevada corporation ("CalbaTech" or
"Acquired Corporation"), the two corporations acting by their
respective boards of directors and sometimes collectively referred to
as the "Constituent Corporations," is entered into this 12th day of
December, 2002, and the Effective Date shall be the latter date
written in conjunction with the signatures affixed hereto.

     WHEREAS, Traffic Tech is a corporation organized and existing
under the laws of the State of Arizona, having been originally
incorporated in May 1998 with its principal business office located
at 8350 E. Evans Road, #B4, Scottsdale, AZ 85260;

     WHEREAS, the authorized capital stock of Traffic Tech consists
of Ninety Nine Million (99,000,000) shares of common stock, par value
of one cent ($0.01) per share, of which Fourteen Million, Two Hundred
Fifty-Six Thousand, Nine Hundred and Seventy (14,256,970) shares are
presently issued and outstanding.

     WHEREAS, CalbaTech is a corporation organized and existing under
the laws of the State of Nevada, having been originally incorporated
on April 29, 2002, with its principal business office located at
18300 Von Karman, Suite 710, Irvine, California 92612;

     WHEREAS, the authorized capital stock of CalbaTech consists of
Twenty-Five Million (25,000,000) shares of common stock, par value of
$0.001) per share, of which Ten Million (10,000,000) shares are
presently issued and outstanding.

     WHEREAS, the respective Boards of Directors of Traffic Tech and
CalbaTech, as well as their respective shareholders, deem it
desirable and in the best interests of the corporations and their
stockholders that the corporations enter into this Agreement pursuant
to the terms and conditions contained herein; and

     WHEREAS, in order to consummate this exchange and in
consideration of the mutual benefits to be derived and the mutual
agreements contained herein, Traffic Tech and CalbaTech approve and
adopt this Agreement.

     NOW, THEREFORE, in consideration of the promises and mutual
agreements, provisions and covenants herein contained, it is agreed
by and between the parties that, in accordance with the provisions of
the laws of the State of Nevada, there shall be an exchange of
interest between Traffic Tech and CalbaTech as of the Closing,
planned for December 20, 2002, with CalbaTech becoming a subsidiary
of Traffic Tech, all on the terms and conditions set forth as follows:

1.  CalbaTech shareholders will transfer all CalbaTech stock to
Traffic Tech, and pay Traffic Tech $200,000;

2.  In consideration of the above, Traffic Tech will issue new
shares to equal an 89% interest to CalbaTech shareholders,
pro-rata, under the provisions of Article IV;

3.  TTI will transfer title to all its assets to Patent Technology
LLC and make certain payments as agreed to fully satisfy any
claims by Paten Technology LLC against TTI; and

4.  TTI will make payments as agreed to any remaining creditors of
TTI to fully satisfy their claims against TTI.

                                    ARTICLE I
                               EXCHANGE OF INTEREST

1.  Shareholder Approval.

     Both CalbaTech and Traffic Tech have received approval by the
majority of the shares entitled to vote of each of the Constituent
Corporations to approve and adopt this Agreement whereby Traffic Tech
would acquire CalbaTech as a wholly-owned subsidiary and the
Constituent Corporations have received the authority to immediately
proceed to effectuate the exchange of interest between CalbaTech and
Traffic Tech.

2.  Filings After Shareholder Approval.

     As soon as practicable after all conditions to the obligations
of the parties to this agreement to the effect the exchange of
interest shall have been satisfied or waived, Traffic Tech shall file
with the Arizona Secretary of State the documents necessary and
required by Arizona Law and take such other and future actions as may
be required by Arizona law to make the exchange of interest
effective.  Notwithstanding the duty imposed by Arizona law to notify
the Arizona Secretary of State, the exchange of interest between
CalbaTech and Traffic Tech shall become effective upon Closing.

                               ARTICLE II
              NAME AND CONTINUED CORPORATE EXISTENCE
                       OF ACQUIRED CORPORATION

     The corporate name of CalbaTech, the acquired corporation, whose
corporate existence is to survive this exchange of interest and
continue thereafter, and its identity, existence, purposes, powers,
objects, franchises, rights and immunities shall continue unaffected
and unimpaired by the exchange of interest.

                                 ARTICLE III
                           DIRECTORS AND OFFICERS
                          OF ACQUIRED CORPORATION

1.  Directors.

     Upon Closing, Traffic Tech directors will nominate James DeOlden
to the Directors seat recently vacated. Immediately thereafter, two
Traffic Tech directors will resign, and the remaining three directors
(Messina, Bourke and DeOlden) will nominate Edward Deese and John
Gordon to the two vacated seats. If desired, and at the sole
discretion of the majority of the directors, Messina and Bourke will
then resign their seats.  The respective names of the Directors of
the Acquired Corporation are as follows:

Edward Deese
James DeOlden
John Gordon

2.  Officers.

     The current officers of Traffic Tech shall resign upon Closing.
The officers of the Acquired Corporation, who shall hold office until
their successors have been elected or appointed and shall have
qualified, or as otherwise provided in its bylaws, are as follows:

James DeOlden, President/Secretary
Edward Deese, Chief Operating Officer/Treasurer
John Gordon, Vice President

                                  ARTICLE IV
                      TERMS OF THE EXCHANGE OF SHARES

     At Closing, Traffic Tech, pursuant to its receipt of shareholder
approval and Board of Director approval, shall effect a Fourteen for
One (14 for 1) reverse split of its outstanding shares such that,
after the reverse split, there shall be One Million, Two Hundred
Thousand (1,200,000) shares of common stock outstanding. Traffic Tech
thereafter agrees to issue to CalbaTech Nine Million Seven Hundred
Thousand (9,700,000) shares, par value of One Cent ($0.01) per share,
of Traffic Tech for all of the current outstanding shares of
CalbaTech.  It is understood and agreed to by the Constituent
Corporations that, post issuance of shares to CalbaTech, CalbaTech
will own Eighty-Nine Percent (89%) of the outstanding shares of
Traffic Tech.  It is further understood that in the event that there
are not enough shares available to issue the entire Eighty-Nine
Percent (89%) controlling interest to CalbaTech prior to its
acquisition, Traffic Tech will issue all of the shares that it has
authorized and understands and agrees that CalbaTech will take such
steps, post acquisition, to increase the number of authorized shares
and thereafter issue that amount of shares to equal the agreed upon
Eighty-Nine Percent (89%) interest.

                                  ARTICLE V
                           OTHER TERMS OF PAYMENT

     CalbaTech agreed to pay to Traffic Tech a total of Two Hundred
Thousand Dollars ($200,000) under the following: CalbaTech agrees to
make a non-refundable payment to Traffic Tech of Twenty Thousand
Dollars ($20,000) upon the execution of this Agreement and will pay
to Traffic Tech Eighty Thousand Dollars ($80,000) at Closing,
scheduled for December 20, 2002,for a total initial payment of One
Hundred Thousand Dollars. These proceeds will be used to settle
negotiated debts of Traffic Tech.  CalbaTech agrees to make another
payment of Fifty Thousand Dollars ($50,000) three (3) months after
the Closing, and a final payment of Fifty Thousand Dollars ($50,000)
six (6) months after closing (the "Remainder Payments") with the
understanding that those monies will be used for the settlement of
all remaining outstanding creditor liabilities. The Remainder
Payments will be made pursuant to a Promissory Note between CalbaTech
and a liquidating trust designee of Traffic Tech.  The Promissory
Note will be signed by CalbaTech, and its founders as individuals,
specifically Edward Deese, James DeOlden, Esq., and John G. Gordon, Ph.D.

                                    ARTICLE VI
                              ASSETS AND LIABILITIES

     Pursuant to, and in connection with the Other Terms of Payment
as contemplated by Article V, above, it is understood and agreed that
Traffic Tech is currently, and will continue to negotiate and settle
any and all outstanding liabilities of Traffic Tech such that, upon
Closing, Traffic Tech will have settled all outstanding liabilities
or will have negotiated to an agreement with each creditor a payment
plan to settle each and every liability of Traffic Tech.  On the
Effective Date, all property, real, personal and mixed, and all debts
due to either of the Constituent Corporations on whatever account, as
well for stock subscriptions as all other choses in action, and all
and every other interest of or belonging to either of Constituent
Corporations shall remain with each of the Constituent Corporations,
and the title to any real estate or any interest, whether vested by
deed or otherwise, in either of the Constituent Corporations shall
not revert or be in any way impaired by reason of the exchange.  It
is understood and agreed to by Traffic Tech that CalbaTech is not,
under any circumstances, assuming the debts, liabilities and
obligations of Traffic Tech..  The parties respectively agree that
from time to time, when requested by either party or by its
successors or assigns, they will execute and deliver or cause to be
executed and delivered all deeds and instruments, and will take or
cause to be taken all further or other action, as either party may
deem necessary or desirable in order to vest in and confirm to each
of the respective parties or its successors or assigns title to and
possession of all the property and rights and otherwise carry out the
intent and purposes of this Agreement.

                                 ARTICLE VII
            CONDUCT OF BUSINESS BY CONSTITUENT CORPORATIONS

     Prior to Closing, CalbaTech shall conduct its business in its
usual and ordinary manner, and shall not enter into any transaction
other than in the usual and ordinary course of such business.  It is
understood and agreed to that CalbaTech shall continue to seek
acquisitions, both tangible and intangible, as well as seek other
sources of debt or equity funding that are in the best interest of
CalbaTech, and as such, these activities are considered within its
usual and ordinary course of business.  Without limiting the
generality of the above, CalbaTech shall not, except as otherwise
consented to in writing by Traffic Tech or as otherwise provided in
this Agreement:

1.  Amend its certificate of incorporation or its bylaws;

2.  Declare or pay any dividend or make any other distribution upon
or with respect to its capital stock.;

3.  Repurchase any of its outstanding stock or by any other means
transfer any of its funds to its shareholders either selectively or
rateably, in return for value or otherwise, except as salary or other
compensation in the ordinary or normal course of business;

4.  Undertake or incur any obligations or liabilities except current
obligations or liabilities in the ordinary course of business and
except for liabilities for fees and expenses in connection with the
negotiation and consummation of the merger in amounts to be
determined after the Effective Date;

5.  Mortgage, pledge, subject to lien or otherwise encumber any
realty or any tangible or intangible personal property;

6.  Sell, assign or otherwise transfer any tangible assets of
whatever kind, or cancel any claims, except in the ordinary course of
business;

7.  Sell, assign, or otherwise transfer any trademark, trade name,
patent or other intangible asset;

8.  Default in performance of any material provision of any material
contract or other obligation; or

9.  Waive any right of any substantial value.

     Prior to Closing, Traffic Tech shall conduct its business in its
usual and ordinary manner, and shall not enter into any transaction
other than in the usual and ordinary course of such business except
as provided.  Without limiting the generality of the above, Traffic
Tech shall not, except as otherwise consented to in writing by
CalbaTech or as otherwise provided in this Agreement:

1.  Issue or sell any shares of its capital stock in addition to
those outstanding on this date;

2.  Issue rights to subscribe to or options to purchase any shares
of its stock;

3.  Amend its certificate of incorporation or its bylaws other than
agreed to and provided for in this Agreement;

4.  Issue or contract to issue funded debt;

5.  Declare or pay any dividend or make any other distribution upon
or with respect to its capital stock.

6.  Repurchase any of its outstanding stock or by any other means
transfer any of its funds to its shareholders either selectively or
rateably, in return for value or otherwise, except as salary or other
compensation in the ordinary or normal course of business;

7.  Undertake or incur any obligations or liabilities except current
obligations or liabilities in the ordinary course of business and
except for liabilities for fees and expenses in connection with the
negotiation and consummation of the merger in amounts to be
determined after the Effective Date;

8.  Mortgage, pledge, subject to lien or otherwise encumber any
realty or any tangible or intangible personal property, with the
exception that upon Closing, Traffic tech will transfer all its non-
cash assets to its secured lender in return for cancellation of the
Note between the two parties;

9.  Sell, assign or otherwise transfer any tangible assets of
whatever kind, or cancel any claims, except in the ordinary course of
business and except as provided for in this Agreement;

10.  Sell, assign, or otherwise transfer any trademark, trade name,
patent or other intangible asset except as provided for in this
Agreement;

11.  Default in performance of any material provision of any material
contract or other obligation;

12.  Waive any right of any substantial value; or

13.  Purchase or otherwise acquire any equity or debt security of
another corporation except to realize on an otherwise worthless debt.

                               ARTICLE VIII
             WARRANTIES OF THE CONSTITUENT CORPORATIONS

1.  Representations and Warranties of CalbaTech.

     CalbaTech covenants, represents and warrants to Traffic Tech
that:

a.  It is on the date of this Agreement, and will be on Closing, (a)
a corporation duly organized and existing and in good standing under
the laws of the jurisdiction of the State of Nevada and (b) duly
authorized under its articles, and under applicable laws, to engage
in the business carried on by it;

b.  Its Board of Directors has and its shareholders have authorized
and approved the execution and delivery of this Agreement, and the
performance of the transactions contemplated by this Agreement;

c.  It has complied with, and is not in violation of any applicable
Federal, State, or local statutes, laws, and regulations affecting
its properties or the operation of its business;

d.  It is not involved as a defendant or plaintiff in any suit,
action, arbitration, or legal, administrative or other proceeding,
which to its best knowledge, would affect the company or its
business, assets, or financial condition in a negative manner; or,
governmental investigation which is pending; to the best of its
knowledge, threatened against or affecting the company or its
business assets or financial condition; and is not in default with
respect to any order, writ, injunction or decree of any Federal,
State, local/foreign court, department, agency, or instrumentality
applicable to it;

e.  The execution and delivery of this Agreement and its performance
in the time and manner contemplated will not cause, constitute, or
conflict with, or result in any of the following: (1) a breach or
violation of any provisions of or constitute a default under any
license, indenture, mortgage instrument, article of incorporation,
bylaw, other agreement or instrument to which the company is a party,
or by which it may be bound, nor will any consents or authorizations
of any party other than those required, (2) any event that would
permit any party to any agreement or instrument to terminate it or to
accelerate the maturity of any indebtedness or other obligation of
the company, or, (3) an event that would result in the creation or
imposition of any lien, charge, encumbrance on any asset;

f.  All federal, state and local tax returns required to be filed by
it on or before the Closing will have been filed, and all taxes shown
to be required to be paid on or before the Closing will have been paid;

g.  All leases now held by it are now and will be on the Closing in
good standing and not voidable or void by reason of any default
whatsoever;

h.  It has not been represented by any broker in connection with the
transaction contemplated, except as it has advised Traffic Tech
in writing;

i.  CalbaTech has reviewed all Traffic Tech SEC filings;

j.  CalbaTech undertakes to make all necessary SEC filings required
by law, and will indemnify Traffic tech officers and directors
against failure on its part to make the necessary filings;

k.  CalbaTech warrants that its Balance Sheet dated December 9, 2002
is accurate in all material respects; and

l.  CalbaTech undertakes to maintain until December 31, 2003, the
current Traffic Tech Director's and Officer's liability
insurance policy.

2.  Representations and Warranties of Traffic Tech.

     Traffic Tech covenants, represents and warrants to CalbaTech
that:

a.  It is on the date of this Agreement, and will be on Closing
Date, (a) a corporation duly organized and existing and in good
standing under the laws of the jurisdiction of the State of Arizona
and (b) duly authorized under its articles, and under applicable
laws, to engage in the business carried on by it;

b.  Its Board of Directors has and its shareholders have authorized
and approved the execution and delivery of this Agreement, and the
performance of the transactions contemplated by this Agreement;

c.  It has complied with, and is not in violation of any applicable
Federal, State, or local statutes, laws, and regulations affecting
its properties or the operation of its business.

d.  It is not involved as a defendant or plaintiff in any suit,
action, arbitration, or legal, administrative or other proceeding,
which to its best knowledge, would affect the company or its
business, assets, or financial condition in a negative manner; or,
governmental investigation which is pending; to the best of its
knowledge, threatened against or affecting the company or its
business assets or financial condition; and is not in default with
respect to any order, writ, injunction or decree of any Federal,
State, local/foreign court, department, agency, or instrumentality
applicable to it;

e.  The execution and delivery of this Agreement and its performance
in the time and manner contemplated will not cause, constitute, or
conflict with, or result in any of the following: (1) a breach or
violation of any provisions of or constitute a default under any
license, indenture, mortgage instrument, article of incorporation,
bylaw, other agreement or instrument to which the company is a party,
or by which it may be bound, nor will any consents or authorizations
of any party other than those required, (2) any event that would
permit any party to any agreement or instrument to terminate it or to
accelerate the maturity of any indebtedness or other obligation of
the company, or, (3) an event that would result in the creation or
imposition of any lien, charge, encumbrance on any asset;

f.  It is a fully reporting company under the Securities Exchange
Act of 1934, and is current in all its reporting requirements;

g.  Traffic Tech's common stock is listed and trading on the Over
the Counter Bulletin Board (under the trading symbol "TRFT") and no
restrictions have been imposed on the trading of these shares by the
National Association of Securities Dealers, Inc. or any other
regulatory body; and

h.  Traffic Tech represents that there are no outstanding options,
warrants or other instruments currently in existence that would
entitle anyone to acquire new shares, post acquisition of
CalbaTech, of Traffic Tech, other than those fully disclosed to
CalbaTech.  In the event any non-disclosed instruments are found
post acquisition of CalbaTech, Traffic Tech understands and
agrees that CalbaTech shall cancel and rescind such options,
warrants or other instruments.

i.  Traffic Tech represents that it has made all timely SEC filings.

                                ARTICLE IX
                         CONSUMMATION OF EXCHANGE

     If the exchange contemplated is completed, all expenses incurred
in consummating the plan of exchange shall, except as otherwise
agreed in writing between the Constituent Corporations, be borne by
the Corporation incurring the expense.

     If the Closing shall not have occurred by December 20, 2002,
then the Constituent Corporations agree that such non-occurrence
shall not act to terminate the Agreement, but rather the Constituent
Corporations agree to extend the termination of this Agreement until
December 31, 2002.  At such time, and at the option of the Board of
Directors of the Constituent Corporations, the time for performance
may be mutually agreed to and extended in writing, with an
accompanying non-refundable payment of $20,000 to Traffic Tech, which
shall be applied against the Closing payment.   In the event of the
abandonment of the merger pursuant to the foregoing provisions, the
party abandoning the merger shall pay the other party a break-up fee
of $50,000 as damages for the irreparable harm visited upon that
party, with the understanding that the non-refundable $20,000 payment
shall be considered offsetting or be credited against the $50,000. In
the event the abandonment is mutually agreed upon, there shall be no
break-up fee. .

                                ARTICLE X
                              MISCELLANEOUS

1.  Access to Books and Records.

     CalbaTech shall, before Closing, afford to the officers and
authorized representatives of Traffic Tech free and full access to
its books and records, and the officers of CalbaTech will furnish
Traffic Tech with financial and operating data and other information
as to the business and properties of CalbaTech as Traffic Tech shall
from time to time reasonably request.  Traffic Tech shall, before
Closing, afford to the officers and authorized representatives of
CalbaTech free and full access to its books and records, and the
officers of Traffic Tech will furnish CalbaTech with financial and
operating data and other information as to the business and
properties of Traffic Tech as CalbaTech shall from time to time
reasonably request.  Traffic Tech and CalbaTech agree that, unless
and until the merger contemplated by this Agreement has been
consummated, Traffic Tech and CalbaTech and their officers and
representatives will hold in strict confidence all data and
information obtained from one another as long as it is not in the
public domain, and if the merger provided for is not consummated as
contemplated, Traffic Tech and CalbaTech will each return to the
other party all data as the other party may reasonably request.

2.  Rights Cumulative; Waivers.

     The rights of each of the parties under this Agreement are
cumulative.  The rights of each of the parties hereunder shall not be
capable of being waived or varied other than by an express waiver or
variation in writing.  Any failure to exercise or any delay in
exercising any of such rights shall not operate as a waiver or
variation of that or any other such right.  Any defective or partial
exercise of any of such rights shall not preclude any other or
further exercise of that or any other such right.  No act or course
of conduct or negotiation on the part of any party shall in any way
preclude such party from exercising any such right or constitute a
suspension or any variation of any such right.

3.  Benefit; Successors Bound.

     This Agreement and the terms, covenants, conditions, provisions,
obligations, undertakings, rights, and benefits hereof, shall be
binding upon, and shall inure to the benefit of, the undersigned
parties and their heirs, executors, administrators, representatives,
successors, and permitted assigns.

4.  Entire Agreement.

     This Agreement contains the entire agreement between the parties
with respect to the subject matter hereof.  There are no promises,
agreements, conditions, undertakings, understandings, warranties,
covenants or representations, oral or written, express or implied,
between them with respect to this Agreement or the matters described
in this Agreement, except as set forth in this Agreement.  Any such
negotiations, promises, or understandings shall not be used to
interpret or constitute this Agreement.

5.  Assignment.

     Neither this Agreement nor any other benefit to accrue hereunder
shall be assigned or transferred by either party, either in whole or
in part, without the written consent of the other party, and any
purported assignment in violation hereof shall be void.

6.  Amendment.

     This Agreement may be amended only by an instrument in writing
executed by all the parties hereto.

7.  Severability.

     Each part of this Agreement is intended to be severable.  In the
event that any provision of this Agreement is found by any court or
other authority of competent jurisdiction to be illegal or
unenforceable, such provision shall be severed or modified to the
extent necessary to render it enforceable and as so severed or
modified, this Agreement shall continue in full force and effect.

8.  Section Headings.

     The Section headings in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

9.  Construction.

     Unless the context otherwise requires, when used herein, the
singular shall be deemed to include the plural, the plural shall be
deemed to include each of the singular, and pronouns of one or no
gender shall be deemed to include the equivalent pronoun of the other
or no gender.

10.  Further Assurances.

     In addition to the instruments and documents to be made,
executed and delivered pursuant to this Agreement, the parties hereto
agree to make, execute and deliver or cause to be made, executed and
delivered, to the requesting party such other instruments and to take
such other actions as the requesting party may reasonably require to
carry out the terms of this Agreement and the transactions
contemplated hereby.

11.  Notices.

     Any notice which is required or desired under this Agreement
shall be given in writing and may be sent by personal delivery or by
mail by either the United States mail, postage prepaid, or by Federal
Express or similar generally recognized overnight carrier.

12.  Arbitration, Venue, Governing Law.

     This agreement shall be deemed to be made, governed by,
interpreted under and construed in all respects in accordance with
the commercial rules of Judicial Arbitration and Mediation Service
("JAMS"). This chosen jurisdiction is irrespective of the country or
place of domicile or residence of either party.  In the event of
controversy arising out of the interpretation, construction,
performance or breach of this agreement, the parties hereby consent
to adjudication under the commercial rules of JAMS.  Said venue of
the arbitration shall be in Orange County, California.  Judgment on
the award rendered by the arbitrator may be entered in any federal or
state court in Orange County, California. The Laws of the State of
California shall govern all disputes regarding this matter.  Any
provision herein which is later determined to be in violation of any
such laws shall be eliminated from the terms of this LOI, and the
remainder of this LOI shall continue in full force and effect.

13.  Consents.

     The person signing this Agreement on behalf of each party hereby
represents and warrants that he has the necessary power, consent and
authority to execute and deliver this Agreement on behalf of such party.

14.  Execution in Counterparts.

     This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original and all of which together
shall constitute one and the same agreement.

     IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the date first above written.



TRAFFIC TECH:                               CALBATECH:


Dated:________________________              Dated:_______________________

By:________________________________         By:_________________________
Marco Messina, Chief Executive Officer      James DeOlden, Chief
                                            Executive Officer