Soak bread in milk till soft.
Add eggs, horseradish, 1 teaspoon salt, and Va teaspoon pepper; beat smooth.
Add beef; mix well.
Shape into 3/4-inch meatballs; place on rack in shallow baking pan.
Bake in 450° oven 10 to 15 minutes.
Heat remaining ingredients to boiling; stir often.
Add meatballs; heat through.
Keep warm; serve with wooden picks.