Break taco shells into food processor and pulse several times to create about 1/2 cup taco shell crumbs. Place into large mixing bowl and add ground beef, seasoning mix, egg and green chiles. Mix thoroughly.

Form mixture into 30 (1-inch) meatballs and drop into hot skillet. Cook until they begin to brown. Carefully turn over and continue browning. Add taco sauce. Coat meatballs with sauce and simmer over low heat, uncovered, 10 minutes.

Sprinkle meatballs with cheese and garnish with cilantro, if desired. Serve with toothpicks.