In a medium sauce pot, heat up olive oil over medium heat and add diced shallots and minced garlic.
Saute until shallots are translucent and sprinkle flour over the top. Stir until shallots are all coated and slowly pour in the wine, while stirring. Keep stirring until all smooth.
Stir in stock and tomato paste.
Add sugar and rosemary sprig.
Add salt and pepper to taste.
Simmer for about 20-25 minutes, stirring often.
Preheat the oven to 350.
Arrange meatballs in a lightly greased baking dish.
Strain sauce through a fine strainer and pour it over meatballs.