Hello Mark, yours is a common question that comes up often. The answer turns on whether you are transacting intrastate business, as opposed to interstate business, in California. You may have to register, for example, if a substantial portion of your business is done in California. Here is an official Q&A from the California secretary of state:

from http://www.sos.ca.gov/business/be/faqs.htm: "Do I have to qualify or register a foreign (out–of–state or out–of–country) business entity?

Before transacting intrastate business in California the business must first qualify/register with the California Secretary of State. (California Corporations Code section 2105, 15909.02, 16959 or 17451.) California Corporations Code sections 191, 15901.02(ai) and 17001(ap) define "transacting intrastate business" as entering into repeated and successive transactions of its business in this state, other than interstate or foreign commerce."

I looked at the Code sections, (Section 17451 is particularly on point) and basically there are many interpretive question you may have to answer in consultation with an attorney that looks at your business. For example, what kinds of customers do you have? Are a lot of the customers buying your software from California? Do you maintain a business address in California? A physical presence? These are the kinds of things you will need to discuss with whoever you decide to retain and more detail/discussion will be needed.

I can't speculate as to the consequences if you don't file, although this may turn up as an issue for you later.

Th usual disclaimer: I'm not your attorney and you are not my client so please don't take this as a binding legal opinion, especially because there are more issues that you will need to decide and discuss further on your own.

Here is the relevant code section (from: http://www.leginfo.ca.gov/cgi-bin/displaycode?section=corp&group=17001-18000&file=17450-17457):

1. (a) Before transacting intrastate business in this state, a foreign limited liability company shall register with the Secretary of State. In order to register, a foreign limited liability company shall submit to the Secretary of State an application for registration as a foreign limited liability company, signed by a person with authority to do so under the laws of the state of its organization, on a form prescribed by the Secretary of State and setting forth: (1) The name of the foreign limited liability company and, if different, the name under which it proposes to transact business in this state.

   (2) The state and date of its organization and a statement that the foreign limited liability company is authorized to exercise its powers and privileges in that state.

   (3) The name and address of an agent for service of process on the foreign limited liability company meeting the qualifications specified in paragraph (1) of subdivision (d) of Section 17061, unless a corporate agent is designated, in which case only the name of the agent shall be set forth.

   (4) A statement that the Secretary of State is appointed the agent of the foreign limited liability company for service of process if the agent has resigned and has not been replaced or if the agent cannot be found or served with the exercise of reasonable diligence.

   (5) The address of the principal executive office of the foreign limited liability company and of its principal office in this state, if any.

(b) Annexed to the application for registration shall be a certificate from an authorized public official of the foreign limited liability company's jurisdiction of organization to the effect that the foreign limited liability company is in good standing in that jurisdiction, if the laws of that jurisdiction permit the issuance of those certificates; or, in the alternative, a statement by the foreign limited liability company that the laws of its jurisdiction of organization do not permit the issuance of those certificates.

(c) The Secretary of State may cancel the application and certificate of registration of a foreign limited liability company if a check or other remittance accepted in payment of the filing fee is not paid upon presentation. Upon receiving written notification that the item presented for payment has not been honored for payment, the Secretary of State shall give a first written notice of the applicability of this section to the agent for service of process or to the person submitting the instrument. Thereafter, if the amount has not been paid by cashier's check or equivalent, the Secretary of State shall give a second written notice of cancellation and the cancellation shall thereupon be effective. The second notice shall be given 20 days or more after the first notice and 90 days or less after the original filing.

(d) The Secretary of State shall include with instructional materials, provided in conjunction with registration under subdivision (a), a notice that filing the registration will obligate the limited liability company to pay an annual tax to the Franchise Tax Board pursuant to Section 17941 of the Revenue and Taxation Code. That notice shall be updated annually to specify the dollar amount of the tax.