<?xml version="1.0" encoding="us-ascii"?><InstanceReport xmlns:xsd="http://www.w3.org/2001/XMLSchema" xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance"><Version>2.4.0.8</Version><ReportLongName>0022 - Disclosure - 16. SUBSEQUENT EVENTS</ReportLongName><DisplayLabelColumn>true</DisplayLabelColumn><ShowElementNames>false</ShowElementNames><RoundingOption /><HasEmbeddedReports>false</HasEmbeddedReports><Columns><Column FlagID="0"><Id>1</Id><IsAbstractGroupTitle>false</IsAbstractGroupTitle><LabelSeparator>

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</LabelSeparator><Level>1</Level><ElementName>aemd_SubsequentEventsTextBlockAbstract</ElementName><ElementPrefix>aemd_</ElementPrefix><IsBaseElement>false</IsBaseElement><BalanceType>na</BalanceType><PeriodType>duration</PeriodType><IsReportTitle>false</IsReportTitle><IsSegmentTitle>false</IsSegmentTitle><IsCalendarTitle>false</IsCalendarTitle><IsEquityPrevioslyReportedAsRow>false</IsEquityPrevioslyReportedAsRow><IsEquityAdjustmentRow>false</IsEquityAdjustmentRow><IsBeginningBalance>false</IsBeginningBalance><IsEndingBalance>false</IsEndingBalance><IsReverseSign>false</IsReverseSign><FootnoteIndexer /><Cells><Cell FlagID="0" ContextID="" UnitID=""><Id>1</Id><IsNumeric>false</IsNumeric><IsRatio>false</IsRatio><DisplayZeroAsNone>false</DisplayZeroAsNone><NumericAmount>0</NumericAmount><RoundedNumericAmount>0</RoundedNumericAmount><NonNumbericText /><FootnoteIndexer /><CurrencyCode /><CurrencySymbol /><IsIndependantCurrency>false</IsIndependantCurrency><ShowCurrencySymbol>false</ShowCurrencySymbol><DisplayDateInUSFormat>false</DisplayDateInUSFormat></Cell></Cells><ElementDataType>xbrli:stringItemType</ElementDataType><SimpleDataType>string</SimpleDataType><IsTotalLabel>false</IsTotalLabel><UnitID>0</UnitID><Label>Subsequent Events</Label></Row><Row FlagID="0"><Id>2</Id><IsAbstractGroupTitle>false</IsAbstractGroupTitle><LabelSeparator>

</LabelSeparator><Level>2</Level><ElementName>us-gaap_SubsequentEventsTextBlock</ElementName><ElementPrefix>us-gaap_</ElementPrefix><IsBaseElement>true</IsBaseElement><BalanceType>na</BalanceType><PeriodType>duration</PeriodType><IsReportTitle>false</IsReportTitle><IsSegmentTitle>false</IsSegmentTitle><IsCalendarTitle>false</IsCalendarTitle><IsEquityPrevioslyReportedAsRow>false</IsEquityPrevioslyReportedAsRow><IsEquityAdjustmentRow>false</IsEquityAdjustmentRow><IsBeginningBalance>false</IsBeginningBalance><IsEndingBalance>false</IsEndingBalance><IsReverseSign>false</IsReverseSign><PreferredLabelRole>verboseLabel</PreferredLabelRole><FootnoteIndexer /><Cells><Cell FlagID="0" ContextID="From2012-04-01to2013-03-31" UnitID=""><Id>1</Id><IsNumeric>false</IsNumeric><IsRatio>false</IsRatio><DisplayZeroAsNone>false</DisplayZeroAsNone><NumericAmount>0</NumericAmount><RoundedNumericAmount>0</RoundedNumericAmount><NonNumbericText>&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0"&gt;Management has evaluated events subsequent to March 31, 2013 through
the date that the accompanying condensed consolidated financial statements were filed with the Securities and Exchange Commission
for transactions and other events which may require adjustment of and/or disclosure in such financial statements.&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"&gt;&amp;#160;&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0"&gt;In April 2013, we invoiced the US Government for the twelfth milestone
under our DARPA contract in the amount of $195,581 and subsequently received that payment.&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"&gt;&amp;#160;&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0"&gt;In May 2013, we issued to a scientific advisory board member and
a scientific consultant a three year option to purchase 125,000 shares of our common stock at a price of $0.11 per share.&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"&gt;&amp;#160;&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0"&gt;&lt;font style="color: black"&gt;In June 2013, we entered into a 5% convertible
note with our&lt;/font&gt; corporate law firm for the amount of $47,000, which represented approximately one-half of the amount we owed
to that firm. The convertible note has a maturity date of October 1, 2014 and bears interest at five percent per annum.&amp;#160;&amp;#160;The
note is convertible at the option of the holder into shares of our common stock at a 10% discount to the market price of the common
stock on the date prior to conversion with a floor price on such conversions of $0.07 per share.&amp;#160;&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"&gt;&amp;#160;&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0"&gt;&lt;font style="color: black"&gt;In June 2013, we completed a unit subscription
agreement with three accredited investors &lt;/font&gt;(the &amp;#147;Purchasers&amp;#148;) &lt;font style="color: black"&gt;pursuant to which the
Purchasers purchased $128,000 of units (the &amp;#34;Units&amp;#34; and each a &amp;#34;Unit&amp;#34;), with each Unit consisting of (i) one
share of Common Stock at a price per share of $0.081 and (ii) a warrant to purchase such number of shares of Common Stock as shall
equal (a) fifty percent of the Subscription Amount divided by (b) $0.081 (the &amp;#34;Warrant Shares&amp;#34;) at an exercise price
of $0.121 per Warrant Share. This resulted in the issuance of 1,580,248 shares of Common Stock and 790,124 Warrant Shares.&lt;/font&gt;&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"&gt;&amp;#160;&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0"&gt;In June 2013, we issued to our CEO the remaining 3,400,000 shares
under his restricted share grant (see Note 6), all of which were vested.&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"&gt;&amp;#160;&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0"&gt;&lt;font style="color: black"&gt;In the three months ended June 30 2013,
we issued 3,675,278&lt;/font&gt; shares of restricted common stock to the holders of three notes issued by the Company in exchange for
the partial conversion of principal and interest in an aggregate amount of $246,500 at an average conversion price of $0.07 per
share.&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"&gt;&amp;#160;&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0"&gt;In June 2013, we borrowed $80,000 at a 10% interest rate from one
of our directors. We repaid that loan and paid accrued interest of $133 in June 2013.&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0"&gt;&amp;#160;&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0"&gt;In July 2013, we borrowed $400,000 from two
of our directors under 90 day notes bearing 10% interest (the &amp;#147;Notes&amp;#148;). If we do not pay back those loans by October
9, 2013, then the notes will bear interest at a penalty rate of 12% and the noteholders will have the right at their discretion
(i) to convert their principal and accrued interest into shares of common stock at $0.088 per share (the &amp;#147;Conversion Price&amp;#148;)
and (ii) receive warrants to purchase common stock equal to 50% of the principal converted under the Notes, with an exercise price
of $0.132 per share. We have reserved 6,931,818 shares of common stock to support the conversion in full of the Notes and accrued
interest as well as the exercise in full of the warrants (should such conversion and/or issuance occur).&lt;/p&gt;



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