Why can't I create the shape of an emobroidered patch from this bitmap?

Sorry in advance, very new to Substance 3D. I have been following this tutorial https://www.youtube.com/watch?v=EWDQcc23IF4 and I was able to recreate his results the first time. But trying it again I am struggling to get Substance to generate the outline of the patch from the bitmap(?) that I inserted. 

I am sure that I am just missing something basic. And usually I would endevour to learn the program more before i come here with questions. But I am on a tight deadline and need to produce an embroidered patch for my day job asap (also all the tutorials I can find online are from a year ago and the interface looks very different) Any help or suggestions would be greatly appreciated. Thanks