Combine bread crumbs and milk in small bowl; set aside. Meanwhile, combine ground beef, sausage, water chestnuts, soy sauce, garlic powder and onion salt. Add to bread crumb mixture; mix well. Form into 1-1/2-in. meatballs. Place meatballs on a greased rack in a shallow baking pan.
Bake at 350° for about 20 minutes or until a thermometer reads 160°, drain. Serve with sweet-and-sour sauce if desired.