Preheat the oven to 350 degrees Fahrenheit. Spray a 9x13 inch baking dish with nonstick spray.
In a large bowl, combine the ground beef, rice, water, onion, egg, garlic powder, onion powder, Worcestershire sauce, Italian seasoning and pepper.
Shape the meat mixture into balls approximately 1-1 ½ inches in diameter balls, 20-22 meatballs, and put in the prepared baking dish.
In a medium mixing bowl, whisk together the tomato sauce, water, brown sugar, garlic powder, salt and pepper.
Pour the sauce mixture over the meatballs so all the meatballs are coated in the sauce.
Put meatballs in a preheated oven and cook for 1 hour and 20 minutes or until they reach an internal temperature of 165 degrees Fahrenheit.
Remove from the oven and serve the meatballs and sauce over rice, noodles or mashed potatoes.