A convenient synthetic protocol for structurally novel and strained highly derivatized tricyclic beta-lactams has been developed. The synthesis involves CeCl3 center dot 7H(2)O/NaI catalyzed addition-condensation of mercaptoacetic acid and N-aroyl-N'-arylidenehydrazines followed by intramolecular cyclodehydration to afford bicyclic 5H-thiazolo[4,3-b][1,3,4]-oxadiazoles, which on treatment with acid chlorides in the presence of triethylamine furnish highly derivatized tricyclic 3H-azetidino[2,1-b]-thiazolo[3,4-d][1,3,4]-oxadiazol-6-ones in 80-93% yields. The process presents an excellent illustration of Ce(III)-catalyzed C-C, C-N and C-S bond formation in a one-pot procedure. (C) 2008 Elsevier Ltd. All rights reserved.