Fortunately, you remember exactly what the light can do. Everyone except the user would think the changes are perfectly normal. So it's completely possible that Sera was a boy named Gene and changed himself, and because of the effect on memory and reality, you wouldn't notice. Of course you have no way to tell. When the flashlight is out of your hands, *anything* that it can change could have been changed, and you could never know.
You chase after Sera anyway. She's ran away and is sitting down on one of the benches inside the mall.
"Sera, or Gene, or whatever... it's a magic flashlight. Look, if you did change yourself I wouldn't remember, but here, try this for just a second, Turn it to blue and point it at yourself."
She takes the flashlight and uses it... and reality changes around you, not that you noticed. Gene, a guy again, is sitting down on the bench. He had run away because he was upset at something, you're not sure what any more.
"Here, take it back," he says. "That's dangerous. You didn't notice when I changed myself. You didn't even notice when I changed you."
"What?"
"I hit you in the crotch. Your crotch looks funny. Are you a girl?"
"Of course not. I'm a guy, I just have a pussy."
"Look, it's on blue now. Just flash it at your crotch, okay, whether you remember it or not? I want to change you back."
You flash the light at your crotch. The unusual growth in your pants feels strange because you're holding the flashlight, so getting a penis doesn't change your memories of having a vagina. "There you go. Do you feel better?"
"Do I feel better about what?" Somehow he seems to have forgotten what he was upset about.
"Never mind, Gene. Let me change myself back." You point the flashlight at your "new" penis and in a second the strange organ is gone. "There, I have a vagina once again."
"Of course you have a vagina."
"So why are you nervously glancing at my crotch if it has nothing to do with that?"
"I wasn't glancing nervously at your crotch."
"You're remembering the time we got drunk and we..."
"No! Come on..."
"Fine," you say.
What you don't know, and can't know, is this: When Gene gave you a vagina, everyone else forgot you weren't like that. but he was holding the flashlight, so he remembered. When you changed it to a penis and back to a vagina, he wasn't holding it, so he forgot too. The result is that *nobody* remembers you ever had a penis--not you, not him.