You must cut Horace open, fix his heart with the lighter, stapler, and pain reliever goo. Once done, bugs will appear. Take the battery and zap the bugs individually. Patch him up again, Then, proceed to cut him open more. You have to use the X-ray. Cut where you see the dark figure, then get the battery once it is open. Zap the opening until a big yellow bug appears and zap him. Repeat this procedure until all the bugs are gone.